[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]



 
           MEDICARE PART D: IMPLEMENTATION OF THE NEW DRUG BENEFIT


                                  HEARING

                                BEFORE THE

                          SUBCOMMITTEE ON HEALTH

                                  OF THE 

                         COMMITTEE ON ENERGY AND 
                                 COMMERCE

                         HOUSE OF REPRESENTATIVES


                        ONE HUNDRED NINTH CONGRESS

                              SECOND SESSION


                              MARCH 1, 2006

                           Serial No. 109-129

          Printed for the use of the Committee on Energy and Commerce









Available via the World Wide Web:  http://www.access.gpo.gov/congress/house



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                         COMMITTEE ON ENERGY AND COMMERCE
                           JOE BARTON, Texas, Chairman
RALPH M. HALL, Texas                      JOHN D. DINGELL, Michigan
MICHAEL BILIRAKIS, Florida                  Ranking Member
  Vice Chairman                           HENRY A. WAXMAN, California
FRED UPTON, Michigan                      EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida                    RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio                     EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia                      FRANK PALLONE, JR., New Jersey
ED WHITFIELD, Kentucky                    SHERROD BROWN, Ohio
CHARLIE NORWOOD, Georgia                  BART GORDON, Tennessee
BARBARA CUBIN, Wyoming                    BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois                    ANNA G. ESHOO, California
HEATHER WILSON, New Mexico                BART STUPAK, Michigan
JOHN B. SHADEGG, Arizona                  ELIOT L. ENGEL, New York
CHARLES W. "CHIP" PICKERING,  Mississippi ALBERT R. WYNN, Maryland
  Vice Chairman                           GENE GREEN, Texas
VITO FOSSELLA, New York                   TED STRICKLAND, Ohio
ROY BLUNT, Missouri                       DIANA DEGETTE, Colorado
STEVE BUYER, Indiana                      LOIS CAPPS, California
GEORGE RADANOVICH, California             MIKE DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire            TOM ALLEN, Maine
JOSEPH R. PITTS, Pennsylvania             JIM DAVIS, Florida
MARY BONO, California                     JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon                       HILDA L. SOLIS, California
LEE TERRY, Nebraska                       CHARLES A. GONZALEZ, Texas
MIKE FERGUSON, New Jersey                 JAY INSLEE, Washington
MIKE ROGERS, Michigan                     TAMMY BALDWIN, Wisconsin
C.L. "BUTCH" OTTER, Idaho                 MIKE ROSS, Arkansas                       
SUE MYRICK, North Carolina
JOHN SULLIVAN, Oklahoma
TIM MURPHY, Pennsylvania
MICHAEL C. BURGESS, Texas
MARSHA BLACKBURN, Tennessee


                       BUD ALBRIGHT, Staff Director
                      DAVID CAVICKE, General Counsel
       REID P. F. STUNTZ, Minority Staff Director and Chief Counsel


                         SUBCOMMITTEE ON HEALTH
                     NATHAN DEAL, Georgia, Chairman
RALPH M. HALL, Texas                      SHERROD BROWN, Ohio
MICHAEL BILIRAKIS, Florida                  Ranking Member
FRED UPTON, Michigan                      HENRY A. WAXMAN, California
PAUL E. GILLMOR, Ohio                     EDOLPHUS TOWNS, New York
CHARLIE NORWOOD, Georgia                  FRANK PALLONE, JR., New Jersey
BARBARA CUBIN, Wyoming                    BART GORDON, Tennessee
JOHN SHIMKUS, Illinois                    BOBBY L. RUSH, Illinois
JOHN B. SHADEGG, Arizona                  ANNA G. ESHOO, California
CHARLES W. "CHIP" PICKERING,  Mississippi GENE GREEN, Texas
STEVE BUYER, Indiana                      TED STRICKLAND, Ohio
JOSEPH R. PITTS, Pennsylvania             DIANA DEGETTE, Colorado
MARY BONO, California                     LOIS CAPPS, California
MIKE FERGUSON, New Jersey                 TOM ALLEN, Maine
MIKE ROGERS, Michigan                     JIM DAVIS, Florida
SUE MYRICK, North Carolina                TAMMY BALDWIN, Wisconsin
MICHAEL C. BURGESS, Texas                 JOHN D. DINGELL, Michigan
JOE BARTON, Texas                           (EX OFFICIO)                            
  (EX OFFICIO)


                               CONTENTS


                                                                        Page
Testimony of:
     McClellan, Hon. Mark, Administrator, Centers for Medicare & 
        Medicaid Services	                                         32
     Dennison, Anne	                                                113
     Hickerson, Marcus	                                                116
     Song, Dennis, Flower Mound Herbal Pharmacy, on behalf of National 
        Community Pharmacist Association	                        122
     Paul, Tom, Chief Pharmacy Officer for Ovations, United Health 
        Group	                                                        128
     Walsh, Jude E., Special Assistant, Governor's Office of Health 
        Policy and Finance, State of Maine	                        137
     Ettienne, Earl, Senior RX Supervisor, CVS/Pharmacy	                142
     Lipshutz, David A., Staff Attorney, California Health Advocates	148
     Rawlings, Susan, President, Senior Services, WellPoint, Inc.	159
Additional material submitted for the record:
     McClellan, Hon. Mark, Administrator, Centers for Medicare & 
        Medicaid Services, response for the record	                174

                  MEDICARE PART D:  IMPLEMENTATION 
                       OF THE NEW DRUG BENEFIT


                       WEDNESDAY, MARCH 1, 2006

                       HOUSE OF REPRESENTATIVES,
                  COMMITTEE ON ENERGY AND COMMERCE,
                        SUBCOMMITTEE ON HEALTH,
                                                          Washington, DC.


        The subcommittee met, pursuant to notice, at 2:00 p.m., in Room 
2123 of the Rayburn House Office Building, Hon. Nathan Deal 
(chairman) presiding.
	Members present: Representatives Deal, Hall, Bilirakis, Gillmor, 
Norwood, Shimkus, Pickering, Buyer, Pitts, Ferguson, Burgess, Barton 
(ex officio), Brown, Waxman, Towns, Pallone, Gordon, Rush, Eshoo, 
Strickland, DeGette, Capps, Allen, Davis, Baldwin, and Dingell (ex 
officio).
        
	Staff present: Chuck Clapton, Chief Health Counsel; Melissa 
Bartlett, Counsel; Ryan Long, Counsel; Nandan Kenkeremath, Counsel; 
Bill O'Brien, Research Assistant; David Rosenfeld, Counsel; Brandon 
Clark, Policy Coordinator; John Ford, Minority Counsel; Chris Knauer, 
Minority Investigator; Purvee Kempf, Minority Counsel; Amy Hall, 
Minority Health Professional Staff Member; Bridgett Taylor, Minority 
Health Professional Staff Member; Jessica McNiece, Minority Research 
Assistant; Jonathan Brater, Minority Staff Assistant; and Chad Grant, 
Legislative Clerk.
        MR. DEAL.  The meeting will come to order.  If someone would get 
the door in the back, please.  The Chair recognizes himself for an 
opening statement.  We are pleased to have Dr. McClellan here as our 
member of our first panel and another rather distinguished second panel 
that will follow shortly thereafter.  The purpose of the hearing today is to 
examine the implementation of the new Medicare prescription drug 
benefit.  Today, I believe, marks the sixtieth day of the implementation 
of the biggest change to Medicare in its 40-year history.  Like most 
significant programs, the new benefit has not gone without a few isolated 
glitches and unexpected problems, but I believe that if there is anything 
wrong with the plan, most of it has been fixed and that that hasn't can be 
fixed over time.  In fact, I understand that most of the early glitches in 
the program have already been resolved thanks to the hard work and 
cooperation of CMS, pharmacists who are dealing with it on a daily 
basis, and the prescription drug plans, themselves.
	Because of this new benefit, America's senior citizens are better off, 
and today more than 25 million Medicare beneficiaries are receiving 
benefits under this new Medicare prescription drug benefit.  This 
includes more than 5.3 million beneficiaries who have signed up 
individually for prescription drug coverage in the last three months, 
including 1.5 million who have signed up in the last 30 days.
	The new prescription drug benefit is working for American citizens 
because of the hard work and commitment by pharmacists, physicians, 
plan employees, public administrators in the States, Dr. McClellan and 
his staff at CMS.  Also, by all the cooperation of family and friends of 
Medicare beneficiaries who take the time to help their loved ones sign up 
for the plan and to make the right choices that they think meet their 
individual needs.
	I talked with constituents in my district and many of them tell me 
that before the implementation of this benefit, they were spending 
several hundred dollars out of their own pocket on prescription drugs.  
Many times it was equal to, and in some cases even exceeding, their 
Social Security benefits.  Today, many of these constituents are now 
spending less than $100 a month thanks to this new prescription drug 
benefit.  Many of them tell me that sometimes the money they didn't 
have for drugs, they had to put on credit cards or ask family members to 
assist in paying for those benefits, and by having this benefit available it 
has restored their personal dignity.
	Anything that you try to do is going to have objectors, and we have 
certainly had our share of objectors, and we will hear some of those 
objections, I am sure, here today.  Many of us have held town hall 
meetings across our districts and have provided assistance in enrolling 
seniors into programs.  Others have not been quite so cooperative in that 
effort, but many of my colleagues on this committee have done exactly 
that -- both Democrats and Republicans.  I thank them for that, because I 
think it is our obligation to assist seniors in making this benefit package 
work for them.
	I want to thank our expert panel of witnesses for taking their time to 
come and we are going to hear a variety of points of view, obviously, in 
a panel as large as the second panel will be.  I look forward to hearing 
your testimony.  Thank you again and at this time I would recognize the 
Ranking Member, Mr. Brown.
	[The prepared statement of Hon. Nathan Deal follows:]

PREPARED STATEMENT OF THE HON. NATHAN DEAL, CHAIRMAN, SUBCOMMITTEE ON 
HEALTH

 The Committee will come to order and the Chair recognizes himself 
for an opening statement.
 The purpose of this hearing is to examine the implementation of the 
new Medicare prescription drug benefit.
 Today marks the 60th day of the implementation of the biggest change 
to Medicare in the 40 year history of the program.
 And like most significant new programs, this new benefit has not 
gone without a few isolated glitches and unexpected problems.
 However, I believe that there isn't anything wrong with the Medicare 
prescription drug benefit that cannot be fixed with time.
        o In fact, I understand that most of the early glitches in the 
program have already been resolved thanks to the hard work and cooperation 
of CMS, pharmacists, and the prescription drug plans.
 Because of this new benefit, America's senior citizens are better 
off.
 Today, more than 25 million Medicare beneficiaries are now receiving 
benefits under the new Medicare prescription drug benefit
        o This includes more than 5.3 million beneficiaries who have signed up 
individually for prescription drug coverage in the last three months, 
including 1.5 million who signed up in the last 30 days.
 The new prescription drug benefit is working for America's seniors 
because of the hard work and commitment by 
        o Pharmacists
        o Physicians
        o Plan employees
        o Public Administrators in the states 
        o Dr. McClellan and his staff at CMS
        o And all the friends and family of Medicare beneficiaries who took 
the time to make sure their loved ones took advantage of all of the choices in 
plans and enrolled in the plan that best suits their individual needs
 I talk with constituents all the time in my district that tell me 
that before the implementation of this benefit, they were spending several 
hundred dollars out their own pocket on prescription drugs.  Many times they 
were turning over their entire Social Security check to the pharmacist and 
still not able to buy all the drugs they needed to stay healthy.
        o These same constituents are now spending less than $100 per month on 
their drugs each month thanks to the new Medicare Prescription Drug Benefit.
        o They tell me how they now have several hundred dollars a month that 
they didn't have before to spend on things other than drugs and that they are 
now able to take all the drugs they need without having to borrow money from  
credit card companies and family members.
        o For many of them, this new benefit has given them their dignity 
back.
 Unfortunately, as is so often the case, the people who voted against 
this bill find themselves on the wrong side of history and are now taking 
advantage of every opportunity to attack this new benefit by seizing on every 
little temporary glitch and exaggerating often isolated problems and making 
them seem like the norm.
 Of course, these partisan attacks and political posturing do nothing 
to help America's seniors.
 In fact, rather than holding town hall meetings to educate 
beneficiaries about the law and help them pick a plan that best meets their 
needs, the Democratic Leadership is instructing their Members to hold town 
hall meetings blasting the benefit.
 How many seniors have they scared away from saving thousands of 
dollars in drug costs because of their rhetoric? 
 How many seniors are having to do without some of the medications 
they need because of this rhetoric?
  How many seniors are having to go to their family members, swallow 
their pride, and ask for money for their drugs because of this rhetoric?
 But I want to thank my Democratic colleagues who chose not to go this 
route and hurt our senior citizens in exchange for some short-term political 
gain.  
 Indeed, many Democrats on this Committee have made the right decision 
by not going the Pelosi route but instead chose to help their constituents get 
the most out of this wonderful new benefit by holding educational town hall 
meetings and helping their seniors enroll in the most appropriate plan for 
their needs.
        o It is my hope that more of your colleagues will follow your lead.
 I want to thank our expert panel of witnesses for taking the time to 
testify before us today.  I look forward to hearing from each of you.

        MR. BROWN.  Thank you, Mr. Chairman, and welcome, Dr. 
McClellan.  Nice to see you again.  Thank you for joining us.  You and I 
have spoken about and I appreciate your taking my call a couple of 
weeks ago about the frustration, anxieties they try to navigate, as seniors 
try to navigate the new drug program.  I know you have taken steps to 
improve customer service at the request of many on both sides of the 
aisle, this panel and others, and I am grateful for that.  Insurers like 
Anthem in Ohio have been trying to make the best out of a bad situation.  
I am equally grateful for that.  But no one in the Bush Administration, no 
one in the insurance industry has been willing to acknowledge, much less 
tackle, the big issues that Medicare Part D has brought.  I find that 
appalling. 
	When Democrats talk about the problems dragging this program 
down, we are accused of politicizing the issue.  That accusation would 
carry a lot more weight if we were making a mountain out of a molehill.  
Instead, the Bush Administration and the Republicans in Congress are 
trying to make a molehill out of a mountain.  The problems with this 
drug program are real, they are significant, they are ongoing.  If someone 
doesn't take those problems seriously and it doesn't sound like people in 
this institution are, we have no hope of solving them.
	First, there is a looming enrollment deadline.  How could it possibly 
be fair for Medicare beneficiaries to pay a penalty if they don't enroll by 
May 15th?  How can anyone blame seniors if they have been either too 
perplexed or too wary to enter the fray?  I spoke to a Medicaid eldercare 
lawyer in Butler County, north of Cincinnati, about two months ago who, 
about a month and a half ago, who told me, as a Medicaid lawyer, that 
she couldn't figure out this benefit for her mother.  And why isn't the 
Administration working with Congress to extend the enrollment 
deadline?
	It is pretty clear that that is just the tip of the iceberg.  The biggest 
problem with the new drug program is the program, itself.  Privatizing 
prescription drug benefits for seniors never made sense and now it is 
wreaking havoc.  You know and I know that the problems dogging this 
program aren't over, they are just beginning.  Wait until seniors face 
prior authorization requirements, driven not by medical necessity, but by 
the bottom line.  Wait until formularies change, premiums change, 
deductibles change, co-pays change.  Wait until drug plans drop out of 
the program.  Wait until seniors learn their neighbors one county over 
have lower premiums.  Wait until seniors who pick the best plan for them 
on that day need another prescription, one that turns a right plan into the 
wrong one.  And these are just the coverage problems.
	The financial issues are equally daunting.  Genentech recently 
announced that it plans to charge $100,000 for a year's worth of the 
cancer drug, Avastin.  The company didn't bother to weave a story to the 
media about recouping R & D cost, Genentech simply said Avastin will 
carve the best and will cost $100,000 because that is what the market will 
bear.  The Medicare drug law prohibits the Federal government, 
amazingly so, we all know this now, prohibits the Federal government 
from negotiating drug prices.  If Genentech wants to arbitrarily charge 
$100,000 so it can generate billions in profits, why should taxpayers 
have anything to say about it?  Taxpayers contributed $45 million to the 
development of this drug.  Americans are being charged the highest price 
in the world for that drug and Medicare is not allowed to negotiate a 
discounted price for that drug.  We might as well eliminate the middle 
man and give the drug industry a vote in Congress and a Cabinet 
position.
	Democrats have introduced legislation to eliminate the prohibition 
on price negotiations.  We have introduced legislation to extend the 
penalty-free enrollment deadline.  We have introduced legislation to 
rationalize prior authorization rules to dispense with mid-year formulary 
changes and let seniors switch plans if the initial one turns out to be a 
lemon.  We have introduced legislation that goes back to the basics to 
enable Medicare beneficiaries to bypass private insurance so they don't 
spend all their time trying to figure out and compare 40 or 50 insurance 
company brochures, instead to simply add Medicare prescription drugs to 
their Medicare benefits package and no confusion, no drama, just a good 
drug benefit, the way we should have done at the beginning.
	Numerous choices have been foisted upon seniors.  It is time to give 
them the one choice they want.  I spent the last six weeks traveling Ohio, 
talking to pharmacists and seniors in Vandalia and Cincinnati and Lima 
and Bowling Green and Toledo and Akron and Cleveland and Mansfield 
and Columbus and Youngstown and one drug store, one pharmacist in 
Norton, Ohio, a suburb of Akron, told me that Congress and the 
president simply must have handed a blank legal pad to the drug industry 
and said hey, write this bill for us, would you?  It's never pleasant to 
admit you were wrong, but it is worse to ride a dead horse.  I hope my 
Republican colleagues will decide it is time to focus on the well being of 
Medicare beneficiaries and help us make this drug program work.  Thank 
you, Mr. Chairman.
	MR. DEAL.  The Chair recognizes the Chairman of the full 
committee, Mr. Barton of Texas.
	CHAIRMAN BARTON.  Thank you, Mr. Chairman, for holding this 
hearing.  I want to thank Dr. McClellan for once again coming before the 
subcommittee.  It is always good to see a fellow Texan.  I am looking 
forward to hearing your perspectives.  We also look forward to hearing 
the perspectives of the panel that is going to come after you.
	Medicare is finally providing patients with prescription drugs after 
years of false starts, failed attempts. and endless debate.  Congress finally 
delivered on its promise and created a Medicare prescription drug 
benefit.  The result is not perfect.  In fact, it is no secret that during those 
negotiations and markups several years ago, I unsuccessfully sought to 
make several changes when we debated the Medicare Modernization Act 
of 2003 in this very room.  At the end of the day, however, I voted for 
the bill, voted for it in committee, voted for it on the floor, and voted for 
it in conference.
	We negotiated a compromise that has created what we now call the 
program, Medicare Part D.  Where our critics before us had failed for 40 
years, that Congress and now this Congress has delivered a Medicare 
prescription drug benefit for millions of senior citizens.  We are now in 
the sixtieth day of this new benefit.  Although you wouldn't believe it 
from some accounts, more than five million seniors have enrolled in the 
new Medicare prescription drug benefit plan.  Another 20 million are 
getting assistance in existing plans that Medicare is helping to subsidize 
in some way.  That adds up to 25 million seniors, and they are signing up 
at the rate of about a half a million a week.  That sounds like a success to 
me, not a failure.
	The people that are signing up are saving money.  Their monthly 
premiums have dropped from an initial estimate of $37 down to about 
$25 a month.  CMS reports that the plans they are joining are doing 
better than anybody expected to increase the use of generic drugs and to 
negotiate deeper discounts with drug manufacturers.  The market works.  
People are making choices and supplies are responding to market 
competition.  This is translated into real savings for Medicare 
beneficiaries, meaning that they have been able to reduce their drug 
spending by thousands of dollars on an individual basis on an annual 
basis.
	We are going to hear from some real beneficiaries today, including 
one from my Congressional district, Mr. Marcus Hickerson, who I can 
see out in the audience over on, unfortunately for me, on the Democratic 
side, that he and his wife are there.  Marcus is a long time friend, a civic 
leader in Waxahachie, and if he says on the record what he has told my 
staff in private, he is saving about $2,400 this year because of the new 
Medicare prescription drug benefit.  These kinds of savings should not 
surprise anybody on this committee.  Many of us understand that when 
we give consumers choices and let free markets and competition work, 
prices fall.  This is what we saw with Medicare prescription drug cards; 
this is what we are beginning to see now with the drug plan, itself.
	The critics don't get it.  Some of them never will, no matter what the 
facts are.  It appears that the Democratic leadership in the House of 
Representatives has decided that political advantage may be gained by 
scaring seniors and discouraging them from enrolling in the new plans.  
They have recently sent out packets of information to all House 
Democrats arguing that patients are not smart enough to understand the 
new benefit.  They say the coverage is spotty at best and signing up is not 
worth beneficiaries' time because it simply cannot save them a dime.  
They are wrong.  They were wrong when they complained about the 
prescription drug card.  They were wrong when they said nobody would 
offer any plans.  They were so very wrong then, and they are just as 
wrong now, in my opinion.  Of course, we are going to have an honest 
debate about that as this hearing progresses.
	As I mentioned earlier, the new benefit and its implementation are 
hardly perfect.  At the same time, I am proud to say that in my 
Congressional district, 81,000 seniors have been able to take advantage 
of the new plan.  That is 81,000 seniors in the Sixth District of Texas 
who weren't scared off and who certainly were smart enough to figure it 
out for themselves.  Some may say that my 81,000 constituents have 
made a mistake.  They may say that my constituents should be confused 
and should be disgusted instead of being pleased at saving the money 
that they are saving.  But I am happy to report that in my district, so far, 
the seniors are voting with their wallets and their good sense, they are 
ignoring the bad advice and they are signing up.
	Now, 81,000 is a good number, but it is not a perfect number.  We 
can do better.  Only about half of my seniors that could sign up have 
signed up so far.  I hope that every Medicare beneficiary who could save 
some money through this new benefit will take the time between now 
and the middle of May to look at the program, decide which benefit 
program most benefits their particular need and does take the opportunity 
to sign up.  I am also going to ask that my Democratic colleagues on this 
committee really take a look at the plans.  Now, there are bound to be 
some of the plans that help seniors in their districts.  They can't be just 
plans that help seniors in Republican districts.
	 Rather than trying to scare and confuse seniors, I would hope that 
we can work together as we go through the implementation phase to find 
out what is wrong with the program and if we can make some changes to 
fix it, let us do it and let us do it on a bipartisan basis.  We owe that to all 
of the millions of Medicare beneficiaries.  We are going to hold 
aggressive oversight over the implementation of this plan.  It is too big of 
a program and it is too important to too many people not to do that.  But 
having said that, if it does appear that it is working, let us admit it, you 
know, let us not keep beating a dead horse.
	I want to thank Chairman Deal for calling this hearing, reiterate my 
thanks to all the witnesses.  I look forward to the testimony and look 
forward to working together to improve this program and implement it in 
a fair way to all of our senior citizens.  Thank you, Mr. Chairman.
	[The prepared statement of Hon. Joe Barton follows:]

PREPARED STATEMENT OF THE HON. JOE BARTON, CHAIRMAN, COMMITTEE ON ENERGY 
AND COMMERCE

        Good afternoon.  Welcome, Dr. McClellan and all of our other 
witnesses.  I look forward to hearing your perspectives on how the new 
Medicare drug benefit is being implemented.
        Medicare is finally providing patients with prescription drugs.  
After years of false starts, failed attempts and endless debates, Congress 
has finally delivered on its promise and created a Medicare prescription drug 
benefit.  The result is not perfect - in fact, it is no secret that I 
unsuccessfully sought to make several changes when we debated the 
Medicare Modernization Act in 2003.  At the end of the day, however, we 
negotiated a bipartisan compromise to create the new Part D program.  Where 
our critics had failed for 40 years, we delivered Medicare coverage of 
prescription drugs.
        As we approach the 60th day of this new benefit, more than 5 million 
Americans have decided to enroll in the new Medicare drug plans.  You wouldn't 
know it from either the news or the critics, but every week, half a million 
more sign up.   Another 20 million people are receiving additional Medicare 
assistance through employer sponsored drug plans and other coverage options.
        Most importantly, these people are saving money.  Their monthly 
premiums have already dropped from the initial estimate of $37 down to an 
average of $25 per month.  CMS reports that the plans they are joining are 
doing better than anybody expected to increase the use of generic drugs and 
negotiate deeper discounts with drug manufacturers.  
This translates into real savings for Medicare beneficiaries, meaning that 
they are able to reduce their drug spending by thousands of dollars.
        We will hear from two Medicare beneficiaries today, including Marcus 
Hickerson, who is a constituent of mine from Waxahachie, Texas.  Marcus and 
his wife have enrolled in new Medicare prescription drug plans, and will save 
approximately $2,400 this year.
        These savings should not come as a surprise to anyone.  Many of us 
understand that when we give consumers choices, and let free markets and 
competition work, prices fall.  That is what we saw with Medicare prescription 
drug cards, and that is what we are beginning to see now with the new drug 
plans.
        The critics still don't get it, and some never will.  It appears that 
the Democratic leadership in the House has decided that political advantage 
may be gained by scaring seniors and discouraging them from enrolling in the 
new prescription drug plans.  They recently sent out packets of information to 
all of House Democrats, arguing that patients are not smart enough to 
understand the new benefit.  They say the coverage is spotty at 
best, and signing up is not worth beneficiaries' time because it cannot 
possibly save them a dime. 
        These critics are simply wrong.  They were wrong when they complained 
about the Medicare prescription drug card.  They were wrong when they said 
nobody would offer any insurance plans.  They were so very wrong then and they 
are similarly wrong now.  	
        As I had mentioned earlier, the new benefit and its implementation are 
hardly perfect.  At the same time, I am proud that 81,000 people in my 
district have been able to take advantage of the new Medicare drug benefit.   
That's 81,000 people who weren't scared off and who certainly were smart 
enough to figure it out.  Some say my 81,000 constituents have made a big 
mistake.  They seem to believe my constituents should be confused and 
disgusted instead of pleased.   But I'm happy to report that in my district, 
people are voting with their wallets and their good sense, and they ignoring 
that bad advice by the tens of thousands.   
        Now 81,000 is a good number, but we can surely do better.  I want 
every Medicare beneficiary who stands to save anything through this new 
program to get the information they need and the opportunity to sign up.
        I am also going to challenge my Democratic colleagues to join the 
millions of Americans who expect our priority to be good policy, not good 
politics.  Rather than trying to scare and confuse seniors in the run-up to 
the November elections, we should work together to do everything we can to get 
seniors the information they need to make informed choices and to select plans 
that will save them the most money.  At a minimum, we owe that obligation to 
all Medicare beneficiaries.  I promise everyone here that people will appreciate our work, and that good policy will make for good politics.
        I want to thank Chairman Deal for calling this hearing, and reiterate 
my thanks to all the witnesses for coming today.  I look forward to their 
testimony.

	MR. DEAL.  Thank you.  I am going to recognize Mr. Waxman 
because he wishes to reserve, to waive his opening statement.
	MR. WAXMAN.  Mr. Chairman, I know Mr. Dingell is going to go 
next, but I have to go to the Rules Committee, so I won't be here for the 
opening statement and I just want to ask unanimous consent that my time 
be added to the question period.
	MR. DEAL.  Well, under the rules, you would have an extra three 
minutes.  I recognize Mr. Dingell at this time, then, for his opening 
statement.
	MR. DINGELL.  Mr. Chairman, I commend you for this hearing and I 
want to express my thanks to Mr. Barton, the Chairman of the 
committee, as he leaves us because we are deeply appreciative of his 
concern for the Democratic members and his invitation to us to 
participate in the handling of this legislation.  I would say that that is 
quite a new experience for us because this thing, this is a piece of 
legislation which was conceived in sin, born of the darkness of night 
with no participation by the Democratic members at all and attended 
only by a fine gaggle of lobbyists for the healthcare industry, particularly 
the insurance industry, and for the pharmaceutical industry.  No 
Democrat will claim parentage of this abomination and whether or not 
we can save it from the evils that are inherited is beyond my kith, but I 
am hopeful that the beginning of this hearing will begin to enable us to 
address the faults in it and to perhaps either take steps to repeal it or in an 
extraordinary burst of good luck, perhaps to reform it.
	Now, having said that, we have sent a letter requesting additional 
opportunities to be heard and for an additional hearing under Rule 11.  I 
am hopeful that our witnesses today will be able to explain some of the 
things which are appearing in the papers and I will submit those to them 
so that they may make a proper comment.  I have told many folks that 
this prescription drug benefit called Part D, the D stands for disaster and 
most of our senior citizens so view it.  While we hear from the Centers 
for Medicare and Medicaid Services that things are quieting down, that 
doesn't appear to be the case as we read it in the papers.  Simply put, Part 
D is incredibly complicated with numerous private insurance plan 
choices, senior haven't got the vaguest idea about how to make the 
important choice well and that is which plan is going to best serve their 
purposes.
	According to the Kaiser Family Foundation poll conducted in 
February, 47 percent of the seniors say that they do not have enough 
information to understand how the benefit will affect them personally.  
This is not surprising, according to a CMS document, beneficiaries have 
to go through 17 steps to calculate annual expected drug costs.  I would 
note that by comparison, there are only 12 steps that the IRS has people 
make in Form 1040 EZ.  This shows us that much needs to be done here.
	For those who have managed to enroll in a private plan, the concern 
is whether they are getting what they were promised or if plans are 
setting up more obstacles and preventing beneficiaries from getting 
needed drugs.  Reports from the field, which come in regularly, indicate 
that excessive requirements before the plans sign off on whether the drug 
are covered is required.  A myriad of different and confusing 
mechanisms for filing appeals exist and nobody knows how to appeal, 
where to appeal or what to do.
	There is use of tiered co-pays to charge patients higher prices for 
drugs that are supposedly covered and these problems are not going to go 
away.  They are part of a vast overhaul that needs to be made on what I 
regard as an abominable piece of legislation which does discredit to this 
body, not only in its substance, but in how it was conceived and how it 
was birthed.
	I have introduced legislation which will address some of the 
problems associated with it and since I have a minute and 17 seconds, I 
am going to just read, for the benefit of the committee, a few clips which 
we got from the papers.  First, the Washington Post.  "Stability of 
mentally ill shaken by Medicare drug plan problems."  And I will ask 
that this all be put in the record in good time.  Then from Newsday, "Part 
D spells disaster for many citizens."  And this is what the article had to 
say.  A pharmacist for 13 years had this to say.  "The whole thing is just 
mind boggling.  Patients are confused.  They are ultimately going to get 
the short end of the stick.  They get confused, frustrated and unruly.  
Most of the problem comes from the dual eligibles."
	In Medicare, this from the New York Times today, and I would 
commend it to the reading of all.  It says, "In Medicare maze, some find 
they are tangled in two drug plans."  And it says, "Many Medicare 
beneficiaries, like Mrs. Beard, tangled in two plans, two hot plans in the 
lingo of pharmacists.  The situation leaves patients at risk of being 
charged two premiums or incorrect co-payments."  It also says, "It is like 
trying to undo spaghetti."  I am sure that the Department of HHS will 
have some worthwhile comments on their efforts to address this problem.
	Last of all, from the Washington Post, again, "Maryland urged to 
cover funding gaps in Medicare plan."  This is something, by the way, 
which has been an ongoing problem of the greatest dimensions and it 
goes on to say this, "A lot of very vulnerable people aren't getting their 
meds, said Herbert S. Cromwell, Executive Director of Community 
Health Behavioral Health of Maryland, which serves children and adults 
with mental health problems."  This is nothing short of a fiasco.  We 
have a mess on our hands, it is going to get worse.  And when people 
start falling into the donut hole, or as I call it, the black hole, we are 
going to find out that the popularity of this, which is already very near 
the floor, is going to go lower.  I wish you all success.
	MR. DEAL.  The Chair recognizes Mr. Norwood for an opening 
statement.
	MR. NORWOOD.  Thank you very much, Mr. Chairman, and Dr. 
McClellan, glad to see you back.  I appreciate the strong effort you have 
been making on this.  Mr. Chairman, I would like to welcome my 
constituent Anne Dennison from Hiawasee, Georgia.  We are so glad she 
is here with us today.  She is 72 years young, cancer survivor, and she is 
actually going to be here to tell us how Part D has helped her, can you 
imagine?  There may be some other people who might have been helped 
by Part D, too.  Anne, we are so happy you are here.  I am not going to 
mislead anybody.  I have concerns about this benefit and Congress will 
need to take a long look at it in the future, but isn't that true of all of 
Medicare as a whole?
	However, Part D is the law and it is actually working.  Did it work 
perfectly on day one?  Heck, no.  It surely did not.  Do I believe that 
some problems could have been prevented?  Yes, they could have.  I 
think so.  However, I also think that this benefit will continue to get 
better and I have lots of in-the-field reasons to believe that to be true.  In 
truth, many of the problems that were encountered in January were the 
result of miscommunication or no communication between CMS and the 
insurance plans and the pharmacies regarding dual eligibles.  That is 
where the basic problem was.  These problems have largely, though I am 
sure not completely, been worked out.
	We need to make sure that every dual eligible is getting the 
medications that they need at the appropriate price.  We need to make 
sure that everyone who overpaid gets repaid, refunded.  Now, this was 
the government's error and I don't trust the insurance plans to make sure 
that wrongful payments are returned.  That just comes from a long 
history of mistrust.  I have talked to pharmacists in my district and the 
money they put out to make this program work proves that they have 
been the frontline warriors for this plan.  They are owed our praise and 
thanks, but more importantly, they need their investment back.  But the 
program is working, premiums are falling, and purchases of medication 
abroad which are inherently unsafe have plummeted.
	However, it is not all sunshine yet and we will be keeping a very 
close eye on these Part D plans, as I am confident Dr. McClellan will, 
too.  And I don't say that very often about CMS.  I say to all insurance 
plans, if you think you will alter your formularies to avoid high-cost 
drugs, that you will use prior authorizations on every refill to discourage 
usage, conclude to drive community pharmacists out or undermine the 
competition of the market, this committee is going to be watching.  Since 
we don't have solid patient protections in these plans, I expect CMS to 
work with this committee to be the gatekeeper that seniors deserve and I 
believe we are going to need.  Mr. Chairman, I truly thank you for 
calling this important hearing and I will look forward to the testimony of 
all of our witnesses.
	MR. DEAL.  Thank you.  Ms. DeGette is next for an opening 
statement.
	MS. DEGETTE.  Thank you very much, Mr. Chairman.  I will waive 
my opening statement in favor of extra time for questioning.
	MR. DEAL.  Ms. Capps is recognized.
	MS. CAPPS.  Thank you, Mr. Chairman, for holding these hearings.  
These hearings can't come soon enough.  Since implementation of Part D 
prescription program began, I have been hearing pleas for help from my 
constituents, including beneficiaries, pharmacists, and State and county 
public health officials.  Because the Administration seems to be tone deaf 
in its praise of this program, I think it might be helpful to give you a 
couple of real life stories from my district, because you can't simply 
brush off what has happened as minor glitches in the system.
	Every day so many real people are suffering.  They can't access their 
necessary medications and they are dealing with the problems that this 
creates.  Take, for example, the many mentally disabled patients who are 
duly eligible.  Many of them can't figure out what the different 
premiums in co-pays would mean for them.  They never could figure that 
out.  I have heard from my district staff about certain patients who 
simply never check their mailboxes.  Perhaps they have a diagnosis of 
paranoid schizophrenia and therefore, they will never know about the 
changes in the system or what new plan they have been assigned to.  
When they arrive at the pharmacies, the pharmacist can't figure out what 
plans these individuals have been arbitrarily assigned to, either, and it 
can take several visits and hours.  We have documented many times this 
happened, hours of waiting on the phone to speak with representatives 
from Medicare and/or the insurance plans, all the while these people are 
going without essential medications that protect against dangerous 
behavior to themselves or to others.
	I have heard from the Santa Barbara County Public Health 
Department about a patient who had difficulty getting medication for his 
diabetes.  The patient actually did know which plan he was assigned to, 
but neither he nor his pharmacist could figure out which tier he was in.  
By the time he went to the doctor, he had gone two weeks without 
medication and had a blood sugar level of 560.  The health department 
also informed me about an HIV patient who needed a medication that 
had always been covered under MediCal, that is Medicaid in California.  
His plan, however, would not approve the necessary dosage prescribed 
by his doctor.  He therefore had to go to the emergency room four times 
a week to receive his medication.  He could not afford to pay for it out of 
pocket, but it was so crucial that he receive this life saving medicine.  
Where is the logic in this?
	How can we simply tell people that the kinks will be worked out and 
that they should just be patient?  We have a responsibility to ensure that 
our seniors and disabled receive prompt and affordable coverage for their 
prescriptions.  Instead, beneficiaries on fixed incomes are being forced to 
pay co-pays for the very first time ever.  While a $3 co-payment may not 
sound like much to the people in this room, imagine what it means for 
someone living on $800 a month and taking ten medications.  Medicare 
is supposed to be a lifeline.  It provides life saving help and 
unfortunately, this new drug plan has failed that test.  I look forward to 
hearing your explanations and solutions and I close with a statement 
from a letter that I just received this last week from a senior, and this is 
her statement to me.  "This is a good way to get rid of the old and the 
poor."
	MR. DEAL.  Mr. Shimkus is recognized for an opening statement.
	MR. SHIMKUS.  Thank you, Mr. Chairman.  Well, I have a few 
letters, myself.  An e-mail from John Barker, who e-mails us, says, "I 
just called to say that the prescription drug plan I helped my mother 
choose is great and has drastically reduced her costs."  I got a letter from 
Genevieve Hepke--Mr. Barker is from Hamilton County in Illinois, one 
of my most rural parts of my district.  I represent 30 counties.  And now 
a letter from a St. Louis suburban area, from Genevieve Hepke from 
Edwardsville, Illinois, "Just a note to thank you for the informational 
meeting on the Medicare prescription drug plan given at the 
Edwardsville YMCA today.  I have spoken with several representatives 
from insurance companies recently and still had only a vague idea of 
how to proceed with choosing a plan.  The SHIP counselor," which is a 
Senior Health Insurance Program individuals, and I want to applaud 
them.  They have just been wonderful helping our seniors.  "The SHIP 
counselor who explained the program today walked us through from start 
to finish with a pleasant presentation and all the information we could 
possible need.  She was very good.  Again, thank you for offering this 
program and also the wonderful work you are doing in Washington.  You 
make us proud.  Sincerely, Genevieve Hepke."
	And I also want to recognize the local Area Agencies on Aging who 
has helped me through probably 12 or 15 Medicare D forums that I have 
held.  Usually I welcome the seniors.  They have all been well attended, 
probably anywhere from 60 to 100 seniors at each event.  I usually 
welcome them, kind of give them the intent of why we passed the 
legislation, which is to make sure that poor seniors have access to 
prescription drugs.  And then I turn it over to more experts than me, 
which is usually the folks from the local Area Agencies on Aging or the 
SHIP counselors, who, as these letters highlight, have just done a 
tremendous job and Mr. Chairman, I just want to take this time to 
recognize those folks.  We have had, you know, problems and challenges 
like everyone else.
	I also want to take the remaining 40 seconds that I have to also thank 
the local pharmacists.  They have struggled and we all know that.  But 
you know what?  Especially in small town rural America, they know 
their customers and their concern for them and they have done the 
yeoman's work and the success of this program really can be tied directly 
to the local pharmacist's counter in their local stores, and so with that, 
Mr. Chairman, I want to thank you.  I think the program is going to 
continue to be a great success for our seniors in America and I yield back 
my time.
	MR. DEAL.  Gentleman yields back.  Mr. Davis is recognized for an 
opening statement.
	MR. DAVIS.  Thank you, Mr. Chairman.  I thank you for being here 
today, Mr. McClellan.  I did not vote for this bill, but the purpose of this 
hearing today is to decide how to make this work.  I want to say that in 
my nine years of Congress I have never heard as much outrage expressed 
as I have about the prohibition in this bill against the Federal government 
negotiating discounts just as Costco, the Veterans' Department, or the 
Department of Defense would for lower prices on pharmaceuticals to 
protect the taxpayer and the Medicare beneficiaries and that is certainly 
something that should be addressed here and hopefully in future 
hearings.
	Perhaps one of the few things that can be agreed upon here today by 
you and the Democrats, Republicans are that some people are benefiting 
from this, but not enough, and my State, Florida, is one of 27 States that 
has had to cover the cost of the dual eligibles to prevent the type of 
people like Representative Capps referred to from slipping through the 
cracks.  My Governor did so only because through March 8 you have 
extended the authority of the Federal government to hold the States 
harmless so one of the questions I would like to ask you today and I will 
be submitting written questions to the record is what are your intentions 
as far as extending that deadline beyond March 8 and will you continue 
to reimburse States if the problems that existed before March 8 are not 
taken care of?
	I also can report to you, and I hope you have heard this, as well, 
there are many independent community pharmacists who have difficulty 
making ends meet that are having to absorb a lot of these costs 
themselves and they are running out of the ability to do so.  In 
Carrabelle, Florida there is one pharmacy who has told us that they are 
about to stop handling the Part D benefit entirely unless somebody steps 
in to make sure that these HMO plans are covering the expenses as they 
are supposed to.  One of the questions I would like to ask you is whether 
you use the authority this Congress gave you to sanction any insurance 
plans that are failing to reasonably and timely reimburse these 
pharmacies who are at risk of not continuing to provide the benefit.
	I also would like to ask you to address why you are not willing to 
support extending the enrollment period beyond May to avoid the 
penalty that many of our constituents are going to have to pay because I 
think it is fair to say there are still millions of seniors out there who 
cannot navigate through this maze of plans.  Many people here in 
Washington have claimed responsibility for that, but why don't we claim 
some further responsibility and extend the enrollment period past May 
and not punish the senior who are not responsible for these problems that 
were created?  So I hope you will be open and you will be honest about 
what is happening out there.  There are numerous problems and it is our 
obligation to address them and there are many lives in the lurch here and 
many people's health is at stake in how we deal with these problems.  
Thank you, Mr. Chairman.
	MR. DEAL.  Mr. Buyer is recognized for an opening statement.
	MR. BUYER.  I tried to pay attention to some of the words that I have 
heard here and I suppose I have to put it in context.  So isn't it just an 
abomination that millions of Americans have access to drugs that they 
have never had access to before?  An abomination.  It is just awful that 
people have access to drugs, isn't it?  It is just awful that seniors have a 
choice in selecting plans that can best be tailored to their physical 
characteristics and needs.  Choices must be awful in a free society.
	Dead horse.  The only dead horse I see are advocates of a command 
economy.  If you want to live in America in a free society and you 
believe in liberty, then you believe in a demand economy.  You believe 
in the marketplace of ideas that give us the greatest drugs and 
blockbuster drugs in the world.  The quest is for the access of those 
drugs.  So these ideas that are thrown out there, oh, Steve, let us just have 
the VA do the pricing as if what, that hadn't been tried before?  In 1990 
when Democrats controlled Congress, they said you know, that is exactly 
what we are going to do.  Those 3.5 million veterans out there that have 
access to it, you know, even though they only take 1 percent of the drugs, 
yeah, let us give them access to those price controls.  Whoa, really.
	So we take 41 million Americans, those 41 million Americans make 
up 40 percent of the available drugs and you don't think there is going to 
be a cost shift out there?  When that occurred, there was such panic, 
about a thousand percent increase in prices to the veterans, that 
immediately Democrats overturned what they had done.  So if you want 
to keep talking about that, please do a little look back on history on what 
Democrat leaders did and their failure and actually their recognition of 
their failure.  That was a dead horse.
	So if you want to continue to talk about these things, the horse, 
which I think is being ridden on the other side, is a unicorn because it is 
pure fantasy to believe that if you are going to have price controls in 
America, that we are going to be the land that will create these 
blockbuster drugs that will provide a quality of life to people, not only 
here but throughout the world.
	Now, Dr. McClellan, you sent a national letter out there and CMS 
did requesting a 90-day look back on electronic reconciliation.  I want 
you to know that these co-pays and deductibles and dual eligibles are still 
a concern.  Did a quick test on three different sized pharmacies in 
Indiana and they are still running about 10 percent.  You use the word 
requested, I would love to see the word required and I will join with my 
colleague with regard about questions on your authority.
	I also concur with my colleagues about the pharmacists being real 
heroes out there.  They are in a pinch, and right now, what I would call it 
is, what is required is economic defibulation because--I just made it up.  
Economic defibulation is their payment schedules are completely out of 
whack.  They were all used to particular payments from Medicaid and so 
what, wholesalers knew when to be paid, manufacturers knew when to 
be paid, suppliers knew when to be paid, but right now it is all different.  
It has been changed.  So I would like for you to work with us.  We want 
to bring in manufacturers and wholesalers to get it right and the predicate 
to do this are the plans because we are going to pay into the plans, the 
contracts are in place, enforceable contracts, and then we can get 
everybody back on a proper payment schedule.  That is what I call 
economic defibulation.  I yield back.
	MR. DEAL.  Ms. Baldwin is recognized for an opening statement.
	MS. BALDWIN.  Thank you, Mr. Chairman.  Dr. McClellan and 
welcome to the very patient witnesses for our second panel later today.  
Many of the concerns that led me to vote against the legislation that 
created this drug plan are being born out, but as I cast my no vote at 3:00 
a.m. and then waited three more hours during arm twisting as the 
majority rounded up the votes they needed to pass this, I really at that 
point could never have imagined or predicted the conversations that I 
would be having with my constituents since the rollout of this program 
began.
	It started when thousands of Wisconsin's seniors received their 2006 
Medicare and You handbook, which included substantive mistakes, 
specifically regarding the low-income subsidy, but we were unable to 
persuade the Department to send out any sort of errata communication.  
Then, over 2,000 Wisconsin seniors were auto-enrolled in plans by 
mistake and then, as I met with constituents, seniors, senior advocates, 
and pharmacists were confused, as we have heard, overwhelmed and 
frustrated.
	I happened to be holding listening sessions throughout my district 
last year as the rollout was occurring and wherever I went, I was sure to 
get several questions; what were you guys thinking when you came up 
with this plan?  Why did you make it so complicated and why can't it be 
like the rest of Medicare?  But these were the mild responses.  It was not 
uncommon for me to spend time one on one with a senior who had just 
burst into tears as they explained their experiences with the program and 
their anxiety about whether they would find a way to remain on a life-
saving drug.
	However, I knew it was really bad when at one of my listening 
sessions, I met with the staff of that county's office on aging who had 
come over to the listening session location after work to let me know 
about their concerns and one of the workers even burst into tears as she 
was describing all of the impediments that she had encountered as an 
advocate for dual eligible seniors in her county.  I know we are here to 
talk about the implementation of Medicare Part D today and how we can 
do better, but I think it is also important to note that there are a number 
of issues that cannot be fixed administratively because they are built into 
the law that created Part D.
	I still believe that the government should be able to bargain for lower 
prices, that plans should not be able to change their formularies more 
frequently than beneficiaries are able to change their plans and that 
beneficiaries who are misled or misinformed should have recourse and 
that we must extend enrollment penalty deadline beyond May 15th.  
Thank you again, Mr. Chairman.  I yield back.
	MR. DEAL.  Dr. Burgess is recognized for an opening statement.  
This is the notice, I think, for the votes at 3:00.  No, the vote is at three 
o'clock.  There will be one vote depending on how we are in terms of 
opening statements and getting started.  It may be that it comes at the 
point before your testimony, so we will go ahead if you will proceed with 
your opening statement.
	MR. BURGESS.  Thank you, Mr. Chairman.  I have an opening 
statement that I will submit for the record, but I have a couple of other 
observations.  First, I do want to welcome my constituent, Mr. Dennis 
Song, to our second panel today.  Dennis has been a longtime friend.  He 
is a pharmacist back in the district and does a great job running an 
independent pharmacy.  Dennis ran the first 24-hour pharmacy when I 
started in practice in Louisville, Texas, and we had many occasions to 
talk about things late at night.
	And not wishing to just unsolicitously pander to the pharmacists, I 
will tell you, Mr. Chairman, that I have heard from a number of 
pharmacists in my district, as well, and the pharmacist, Bill New in 
Denton, was very kind and would always call me up and say I am going 
to put you on hold with the hold music that I am getting from the drug 
plan so you will be able to listen to it with me and that was very kind of 
him.  They played some rather catchy tunes.  But I do think that the 
problem has ameliorated over the past several years, but Dr. McClellan, 
you know my frustration and my anxiety for pharmacists in the district 
and throughout the country that make good on the patients' needs and 
sent them out of the pharmacy with the prescriptions which Secretary 
Leavitt told them to do.  I think we need to go one step further and assure 
the pharmacists that we would do everything we could to make certain 
that they weren't carrying the entire freight for that.
	With the benefit of hindsight, yes, perhaps it wasn't the best idea to 
bring the dual eligibles in at the very first of this program.  We can't 
undo the past, but certainly they can make the argument that we are 
having this hearing a month late and perhaps we are, but the reality is the 
prescription drug benefit is 40 years late and seniors who signed up for 
Medicare those first days back in 1965 when they were 65 years of age 
are now 106 years of age waiting for that prescription drug benefit, so I 
hope it doesn't take us that long to get this right and I don't believe that it 
will.  And I do believe that fundamentally it is a good plan.
	As part of my research in getting ready for this hearing, looking back 
over what was proposed in the previous Administration in the year 2000, 
March 9 of 2000, in fact, when the President and Senate Democrats were 
unified, there was a press release from the White House, the President 
and Senate Democrats are unified in a vision for the Medicare 
prescription drug benefit and amongst the principles that they have 
enumerated here, that it would have to be voluntary; I believe ours is.  It 
would have to be affordable for beneficiaries of the program.  Here is an 
interesting one.  It has to be administered using private-sector entities 
and competitive purchasing techniques.
	They go on to say discounts should be achieved through competition, 
not regulation or price control.  Well, that is probably a pretty good idea 
and for once I find myself in agreement with the Clinton Administration.  
Mr. Chairman, Chairman Barton of the full committee said we are going 
to have aggressive oversight of this program, so I certainly thank you for 
holding this hearing today.  I am going to take Chairman Barton at his 
word.  I hope that this is the first of several visits that Dr. McClellan will 
have here.  We will name that the "McClellan Chair" in the Energy and 
Commerce Committee.  It is going to require a lot of work on the part of 
this committee to make certain this is done right, but we owe nothing less 
to the American people.  I yield back.
	MR. DEAL.  Mr. Pallone is recognized for an opening statement.
	MR. PALLONE.  Thank you, Mr. Chairman.  I am amazed by my 
colleagues on the other side attempt to rewrite history is, I guess, the best 
I can say.  I think the gentleman from Texas should remember that the 
Democrats, to the person, I think, every Democrat, voted for a 
Democratic substitute to this legislation that would have been very much 
like Part B, under Medicare, not privatization, very simple, $25 a month 
premium, $100 deductible, 80 percent paid for by the Federal 
government, 20 percent co-pay, all drugs included, go to any pharmacy, 
all the choice you want and negotiated price reductions, just like the VA 
and the military, so when you say what was the Democratic alternative, 
we had a Democratic alternative.  It was a good alternative and it was 
one that would have avoided all the mass confusion that we are living 
with now under this Republican bill.
	The other thing I wanted to comment, but the comments that the 
gentleman from Indiana made, I think that his problem is that he is 
looking at this strictly from an ideological point of view.  I don't think he 
is here now, but I have to comment.  He talked about command and 
control.  Do you think that when I have my town meeting in Edison that 
my senior citizens--I had a town meeting in Edison last week, we had 
about 150 seniors--do you think that they care about command or control 
or that they see, you know, Medicare Big Brother swooping down on 
them and telling them what to do with their drugs?  I mean, they are not 
looking at it that way.  They are just looking to survive.  You know, he 
talked about choice.  They don't think they have any choice because now 
they are being limited in what drugs they can choose, what pharmacy 
they can go to.  That is not choice.
	I mean, the first thing that I was told by the seniors at my forum, 
they wanted to know why there were not negotiated prices, why the 
government wasn't doing what we do with the VA and the military to 
keep the prices down and I had to say look, the only reason I can think of 
is because this bill was written by the pharmaceutical and the insurance 
industry and it wasn't written for you because the President wasn't 
concerned about how this was going to work out for you.  I want to be 
honest with you.  All I get from my seniors is mass confusion.  They just 
want a simple program, they are very comfortable with Medicare, you 
know, the way it is traditionally.  They would have been very happy if 
we just expanded the Medicare program to include a prescription drug 
benefit and I want, in the time I have left, I just want to commend Mr. 
Dingell for this letter that he wrote asking for more oversight because I 
think it is absolutely necessary.
	Several of the Republicans talked about the problems at the 
pharmacies.  I went to a pharmacy in my district last week or two weeks 
ago and again, mass confusion.  Pharmacists are shelling out all kinds of 
their own money because they don't want to turn people away.  We need 
an oversight hearing on the pharmacy issue, we need an oversight 
hearing on the States and how they are going to be reimbursed and what 
they are going to do.  I mean, I do appreciate the fact that some of my 
Republican colleagues said that we are going to take our oversight 
responsibility seriously and that should be to respond to our letter and 
have several more hearings on various aspects of this because I am not 
going to call it names.  It is just mass confusion.  That is what it is.  It 
is very simple.  And anybody who tells me that there is not tremendous 
confusion out there, I think is just kidding themselves.  Thank you, Mr. 
Chairman.
	MR. DEAL.  Mr. Pitts is recognized for an opening statement.
	MR. PITTS.  Thank you, Mr. Chairman.  I will submit my opening 
statement for the record.
	[The prepared statement of Hon. Joseph R. Pitts follows:]

PREPARED STATEMENT OF THE HON. JOSEPH R. PITTS, A REPRESENTATIVE IN CONGRESS 
FROM THE STATE OF PENNSYLVANIA

 Chairman Deal, I would like to thank you for convening this hearing 
today on such an important issue.
 In my district in Pennsylvania, there are 101,576 Medicare 
beneficiaries eligible to enroll in Medicare Part D.  As of February 11, 
46,481, or 46%, of them have chosen to do so.  
 According to CMS, only 65% of those eligible in my district are 
expected to enroll in Part D this year.  Yet, the average expected enrollment 
across all of Pennsylvania is 72.5%.  The estimated 2006 enrollment for the 
districts of three Members of my delegation is 95% or higher.
 I am concerned with the 35% of Medicare beneficiaries in the 16th 
district who are not expected to enroll in the program, and it is my hope that 
our witnesses today will shed some light on why so many of our seniors are 
choosing not to participate and how we can encourage them to do so.
 Those already enrolled in Part D and the pharmacists who serve them 
have faced difficulties and confusion in the opening days of the program - 
        o seniors who did not know that they had already been enrolled in 
plans, 
        o dual eligibles hit with co-payments larger than they expected, 
        o pharmacists dispensing drugs without knowing if the plans or the 
state would reimburse them.
 I am pleased that many of these problems have been resolved; however, 
the program still faces many more, which we will address today.
 Mr. Chairman, I welcome the opportunity today to hear testimony from 
Dr. McClellan and the rest of the witnesses.
 I yield back my time.

	MR. DEAL.  Mr. Bilirakis.
	MR. BILIRAKIS.  Thank you, Mr. Chairman.  Yes, we should have 
more oversight and yes, we should have more hearings, but I should 
think when we have those hearings, just as the hearing today should be, 
we should be open minded; we should be here to realize that we are 
trying to learn.  This is an educational process.  But when we come into a 
hearing, Mr. Chairman, as some have and they refer to certain 
newspapers and whatnot, and that is their means of education, that is the 
way that they see the program, I just wonder how open minded we really 
are.
	There is a recent issue of the AARP magazine with multiple pages 
on the plan.  It just lays it out with illustrations and whatnot.  It does a 
very good job and it encourages the seniors to not just randomly 
basically not take the plan and not consider the plan, but take into 
consideration many things, such as particularly the catastrophic portion 
of it all because you may not have much of an illness today and you 
don't have much of a need for drugs today, but no one knows what the 
future holds.  That should be, that is part of education, too.  But if we 
were going to be depending on what we read in the newspapers, I am 
here to tell you that Medicare would have never gotten off the ground.
	Take a look at those same newspapers back in the mid-60s and what 
they said about Medicare, about all the complexities, and all the 
problems that people were having.  People were not signing up for it and 
that sort of thing and if we had taken all that, not we, but those who were 
here at that time, if they had basically said we are going to discard it 
because the newspapers say hey, there are an awful lot of problems and it 
is no good, then we would not have Medicare today.  So Mr. Chairman, 
we are just not open minded, and we talk about wanting to have hearings, 
well, it is just another opportunity to get up here in a very partisan and 
biased manner, just express our point of view, not on a basis of 
education, and what we are really learning.
	I spent some time in a pharmacy in my district last week and I went 
into the back where the pharmacists are and I talked with them and I 
listened when they talked to patients, so I went up with them and talked 
to the patients and that sort of thing and you know, it is not perfect.  I 
didn't hear a single patient who complained about the plan on that 
particular day.  I am sure I could pick another day and there would be a 
patient or two who might complain about the plan or may have questions 
that possibly the pharmacist cannot answer, but that is the way, I think, 
that we learn.  That is the way we learn.  I don't think we learn just by 
picking up the newspapers or coming up here, shutting our ears to any of 
the testimony.
	We have pharmacists here today.  We have patients here today and 
hopefully we will open up our ears and listen to them.  And there are 
problems and people have expressed some of those problems.  There is 
no question about it and we are going to have to do some molding and 
remolding as time goes on, but this is basically what we have done with 
Medicare, too, and so hopefully, Mr. Chairman, we can all work together 
if we really want to, rather than continue to throw stones at each other 
and I think we are going to have a plan that we will be proud of in the 
future.  Thank you, Mr. Chairman.
	MR. DEAL.  Thank the gentleman.  We are getting close to the time 
the vote is going to take place.  We are going to continue with opening 
statements and we will rotate someone in the chair so that we can 
hopefully get through these during this vote.  It is only one vote.  So if 
you have made your opening statement, you may want to leave and go 
vote early and come back.  We are going to be rotating.  Mr. Strickland, 
you are next.
	MR. STRICKLAND.  Thank you, Mr. Chairman, and I will be very 
brief.  I have listened to the comments of my colleagues on both sides of 
the aisle.  I think Mr. Pallone was absolutely correct.  Seniors are 
confused, many of them are frightened.  They don't know what to do.  
Pharmacists are upset.  We are listening to our constituents, that is who 
we are listening to.  We are listening to the people in our districts and the 
newspapers, I think, are reflecting what they are hearing from the 
citizens across this country.  I think the greatest example of the utter 
failure of this plan is the fact that when the President of the United States 
gave his State of the Union Address, this which was supposed to be one 
of the two or three most valued accomplishments of his presidency so far 
was not mentioned, not one word, and the reason it wasn't mentioned is 
that he knows, and we all know, that this is a deeply flawed, perhaps 
fatally flawed program.  It is going to have to be changed dramatically.
	I would like to see it repealed and we start all over and do what we 
should have done and that is add a benefit that is a part of Medicare, that 
is a part of Medicare easily understood, easily financed, that does 
provide choice to our seniors.  Our seniors have lost choice with this plan 
and they are angry and that is why the President of the United States, 
giving his State of the Union Address failed to even mention that this 
body had passed this, what was supposed to be a very successful, 
meaningful domestic policy.  So with those comments, I look forward to 
the testimony that is going to be given to us today and I yield back the 
remainder of my time.
	MR. DEAL.  Thank you.  Mr. Pickering is recognized for an opening 
statement.
	MR. PICKERING.  Mr. Chairman, thank you very much for having 
this hearing.  To Dr. McClellan, I want to thank you for your leadership.  
I know that this is not the easiest time between dealing with irritable 
Members from the Katrina region and trying to implement a major, 
major change in Medicare Part D.  We appreciate your commitment to 
solving the problems and making things work and correcting things as 
they are brought to your attention.  I look forward to your testimony and 
I look forward to working together with you, whether it is from our 
region or for those who are now eligible for Medicare Part D, to get the 
best plan for them at the best price.  So thank you for your leadership.
	MR. DEAL.  Thank the gentleman.  Mr. Rush.
	MR. RUSH.  Thank you, Mr. Chairman, and I appreciate you holding 
this hearing, also.  And I also want to welcome Dr. McClellan again.  
Mr. Chairman, it has been demonstrated in this hearing so far, there are 
vast differences of opinion regarding both the enrollment and the 
effectiveness of the Medicare Part D program that was enacted into law.  
Mr. Chairman, two weeks ago we sat in this same room and we heard the 
Secretary of Health and Human Services, Michael Leavitt, tell the full 
committee that our seniors were becoming excited about the new Part D 
benefit and that they were starting to enroll in the new program in 
increasing numbers.
	The Secretary's contention was that seniors were really starting to 
understand how the new system worked, that they were beginning to 
enthusiastically support the new program.  As the Secretary was making 
these comments, I was astounded.  I thought to myself who is he talking 
about?  Who are these seniors?  Who are these beneficiaries and where 
are they?  Certainly, the experience in my district does not bear out his 
comments; it is vastly different in my district.  Mr. Chairman, I am 
telling you and other members of the committee that my seniors are 
completely confused, they are frustrated, they are confounded and they 
are fighting mad with this new Medicare Part D benefit program.
	Mr. Chairman, the numbers that the Secretary espoused bear the fact 
out that this is a confused state that our seniors find themselves in.  Only 
4.9 million seniors who are eligible have actually signed up for this 
Medicare Part D drug coverage.  Just last week I held yet another 
seminar in my district on the south side of Chicago to help my 
constituents navigate the complicated maze of private insurance carriers 
and their various benefit packages, the second one, and we plan to 
conduct more.  I found that my constituents are completely confused.  
They do not understand the basic elements of the new program.
	I am particularly worried about the senior citizens and those seniors 
who may be immobile or who have lost some of their mental capacity.  
Who is helping these folks?  We need to do a better job and as such, Mr. 
Chairman, I am pleased that we are having this hearing.  I want to close 
by suggesting that members of this committee seriously consider 
legislation that would extend the May 15 deadline for enrolling in the 
program and make other reforms that simplify the new benefit program.  
We are not meeting our goals.  We are not meeting our objectives.  We 
are really not meeting the interests of the American people, particularly 
the elderly and those who depend on Medicare for their basic healthcare 
coverage.  With that, Mr. Chairman, I yield back the balance of my time.
	MR. DEAL.  Mr. Hall is recognized for an opening statement.
	MR. HALL.  Mr. Chairman, would it be too much if I asked for a 
second reading of all the speeches that have been made here?
	MR. DEAL.  It would be too much.
	MR. HALL.  I will yield my time back and I will ask unanimous 
consent to put a statement in the record.
	MR. DEAL.  Without objection.  Ms. Eshoo.
	MS. ESHOO.  Thank you, Mr. Chairman, for having this hearing and I 
hope that there will be a commitment of the leadership of the committee 
to hold more in terms of oversight because I think it is a must.  It is good 
to see you, Mark.  I don't know how glad you are to be here, but I have a 
printed statement for the record and I just want to say the following.  I 
have the privilege of representing an incredibly distinguished 
Congressional district, you know that.  You were a part of it at one time 
and I think there are more Ph.D.s in my Congressional district than any 
other place in the country, so people are very sophisticated.  They don't 
really identify with a solid Democratic answer or a solid Republican 
answer.  You give them the information; they will make up their own 
minds.
	Their report back to me is that this is a real Rube Goldberg plan.  I 
didn't think that it was sound public policy when it was presented, but I 
weighed in.  I didn't vote for it.  What we are doing here today is really 
reacting to what the reception in the country has been of the plan now 
that it is the public policy of the United States of America.  So we are 
going to have to, I think, first of all, to be honest about it and what the 
problems are.  It is confusing, it is enormously complex.  Pharmacists in 
my area, Mark, are not happy.  They are pulling money out of their own 
pockets to help people.  The whole issue of the card that people got to 
begin with, I think should have been instructive to CMS because what 
problems were experienced then have now been passed over to the 
system, so I am going to direct my questions to you about what you plan 
to do to fix some of these things.
	I think some things are not repairable because the legislation, I 
think, represents flawed public policy, but there are some things that we can 
do and I want to know, in my questions, what you support, what you don't 
and of course, I will listen to your testimony, as well.  I think this could 
have been done much better.  I think it could have been much clearer.  I 
think it could have been far less complex and I might say if it was less 
ideological we might not be experiencing the problems that we are now, 
so but as I say to my constituents, I will do everything I can to try and  
fix and repair something that you are having to live with.  They are not 
happy, they are not pleased and I think that this has given choice a really 
bad name and that is what my constituents say and as you know, Mark, 
they are quite sophisticated.  So I am going to go and vote and then come 
back and ask you some questions.  Thank you, Mr. Chairman.
	MR. DEAL.  Mr. Allen.
	MR. ALLEN.  Thank you, Mr. Chairman.  I appreciate your calling 
this particular hearing to examine the current status of the Medicare Part 
D program.  Speaking for my constituents in Maine, I have to say that the 
process has been chaotic.  The Medicare Modernization Act of 2003 
gave the pharmaceutical industry and the insurance industry most of 
what they wanted, but it denied senior citizens and people with 
disabilities the simple option of adding a Medicare administered 
prescription drug plan to their Medicare benefits.  Instead, this law forces 
beneficiaries to sort through the ever changing array of plans, premiums, 
co-payments and formularies offered by dozens of private insurance 
companies in each State.
	Because Medicare is prohibited from negotiating price discounts, the 
drug benefit will never provide beneficiaries with a reliable and 
affordable access to prescription drugs.  The gentleman from Indiana was 
talking about the problem of having price controls in America.  Well, 
what we are talking about is good enough for the VA, it is good enough 
for Medicaid, it is good enough for military retirees.  If those are price 
controls, I would say people under Medicare should have the benefit of 
them.
	Maine is fortunate that we had a Governor that was committed to 
ensuring access to prescription drug coverage to all Medicare 
beneficiaries and that meant assuming a very hefty financial burden 
without a guarantee of full Federal reimbursement.  We had such chaos 
in this transition period.  Maine has now spent $6 million of its own 
money to ensure that low-income beneficiaries have access to the 
prescription drugs because the plans weren't working, CMS wasn't 
coming through the way we needed it.
	I want to say that a lot of this has to do with the dual eligibles and 
back in March or April of last year, Senator Rockefeller and I introduced 
legislation that would have extended the period for the transition for dual 
eligibles from essentially six to 10 or 12 weeks, whatever it was, to six 
months and we were assured over and over again by CMS that it is no 
problem, it is going well, we won't have an issue here.
	I do want to welcome Jude Walsh today.  She is the director of 
pharmacy assistance in Maine.  She is here to share her thoughts on 
managing the Part D program from the States' perspective, particularly 
this challenge of handling the dual eligibles, moving them from 
Medicaid to new private plans.  And then lastly, I would just say this, no 
amount of public relations spin can cover up the frustration Americans 
have experienced during the two months of implementation of Medicare 
Part D and I agree with Mr. Strickland.  If this plan is so good, the 
President, when he had a national television audience during the State of 
the Union speech, would have mentioned it at least once.  We need a 
better plan, we can work toward a better plan and I do think this hearing 
is a start toward gathering the information we need and with that, Mr. 
Chairman, I yield back.
	[Additional statements submitted for the record follow:]

PREPARED STATEMENT OF THE HON. ED. TOWNS, A REPRESENTATIVE IN CONGRESS FROM 
THE STATE OF NEW YORK

        WHILE I UNDERSTAND THAT THE CENTERS FOR MEDICARE & 
MEDICAID SERVICES (CMS) HAVE BEEN WORKING DILIGENTLY, THE 
MEDICARE PART D PRESCRIPTION DRUG BENEFIT PROGRAM HAS BEEN 
PLAGUED WITH PROBLEMS AT EVERY LEVEL SINCE ITS IMPLEMENTATION. 
        SINCE THE PROGRAM WENT INTO EFFECT, CONGRESSIONAL OFFICES 
HAVE BEEN FLOODED WITH CALLS ABOUT THE PROBLEMS THAT 
BENEFICIARIES ARE HAVING ACCESSING VITAL MEDICATIONS.
        FIRST OF ALL, MANY BENEFICIARIES ARE CONFUSED ABOUT 
WHETHER OR NOT THEY SHOULD ENROLL IN PART D. ADDITIONALLY, 
MANY ARE FRUSTRATED BY THE CHOICES OF PLANS AND CONFUSED 
ABOUT PICKING THE PLAN MOST SUITED TO THEIR NEEDS.
        YET THE PROBLEMS HAVE NOT STOPPED THERE.  MEDICARE 
BENEFICIARIES WHO THOUGHT THEY WERE ENROLLED IN PART D PLANS 
ROUNTINELY ARRIVE AT PHARMACIES TO DISCOVER NO RECORD OF 
THEIR PLANS. LOW-INCOME MEDICARE BENEFICIARIES ARE BEING ASKED 
TO PAY HUNDREDS OF DOLLARS FOR THEIR MEDICATIONS BECAUSE 
THEIR PART D INSURANCE PLANS HAVE NOT BEEN UPDATED WHEN 
ENROLLEES QUALIFY FOR LOW-INCOME SUBSIDIES. 
        DUAL-ELIGIBLE BENEFICIARIES ARE DENIED COVERAGE FOR 
NECESSARY MEDICATIONS WHEN THE PLAN, INTO WHICH THEY HAVE 
BEEN AUTOMATICALLY ENROLLED, DOESN'T INCLUDE THEIR 
MEDICATION ON ITS FORMULARY.  THIS IS REGARDLESS OF THE FACT 
THAT CMS HAS ASKED ALL PLANS TO PROVIDE A 30-DAY SUPPLY OF NON-
FORMULARY DRUGS TO NEW ENROLLEES. 
        PHARMACISTS ARE BEING FORCED TO SPEND HOURS ON HOLD WITH 
MEDICARE AND PRESCRIPTION DRUG INSURANCE PLANS SIMPLY TO 
VERIFY BENEFICIARY ELIGIBILITY. 
        CLEARLY THE DISCONTINUITY OF HEALTH SERVICES EXPERIENCED 
BY MEDICARE BENEFICIARIES IS INEXCUSABLE. UNFORTUNATELY, THE 
PROGRAM STILL IS NOT MEASURING UP AND BENEFICIARIES IN MY 
DISTRICT AND THROUGHOUT THE NATION ARE BEING NEGATIVELY 
IMPACTED. AS MEMBERS OF CONGRESS, WE ARE ENTRUSTED WITH THE 
RESPONSIBILITY OF PROTECTING THE NATION'S HEALTH.  IT IS 
IMPERATIVE THAT CONGRESS MAKES IT CLEAR TO AFFECTED PARTIES 
AND BENEFICIARY GROUPS THAT WE ARE AWARE OF THE PROBLEMS 
WITH THE RECENTLY IMPLEMENTED PROGRAM AND DO NOT VIEW PART D 
AS A SUCCESS.  
        ADDITIONALLY, I CHARGE CONGRESS TO CONTINUE TO HOLD THE 
CENTERS FOR MEDICARE & MEDICAID SERVICES ACCOUNTABLE AND 
FORCE CMS TO MAKE THE NECESSARY CHANGES TO ENSURE THAT 
BENEFICIARIES ARE ABLE TO ACCESS LIFE-SUSTAINING MEDICATIONS.  
THANK YOU MR. CHAIRMAN.

PREPARED STATEMENT OF THE HON. HENRY A. WAXMAN, A REPRESENTATIVE IN 
CONGRESS FROM THE STATE OF CALIFORNIA

	The implementation of the Medicare prescription drug program has been 
difficult and disappointing.  It has been filled with confusion and 
disruption.  It has caused anxiety and serious problems for people trying to 
get their medicines.
	January 1 should have been a red letter day for America's seniors and 
persons with disabilities.  That should have been the day when they finally 
got simple and dependable coverage of their prescription drugs as a regular 
part of Medicare.  Their Medicare card should have been enough to give them 
access to their drugs in any pharmacy in America.
	Instead, the benefit came in the form of coverage through hundreds of 
private plans, each different in coverage and conditions, each different in 
cost and the price of drugs covered.  The choices were dizzying and difficult.  
People spent hours trying to decipher the variables in the plans, made a 
choice, and then found the information changed the next time they looked.
	And that was just the beginning.  When people tried to go in and get 
their drugs, they found their eligibility couldn't be established, or their 
drugs weren't covered.  The people who had been covered under Medicaid and who 
were switched summarily on January 1 were the worst off.  But they weren't the 
only ones with problems.
	All of these difficulties in implementation were the result of a 
combination of problems:  a flawed design for the benefit, a failure to 
anticipate implementation problems, and too big a job for too little staff.
	Certainly, there are people who weren't covered before who are pleased 
to have the new benefit.  We will hear from some today.  And certainly we all 
welcome success stories, and we want this benefit to work.  But the fact is, 
for too many seniors and persons with disabilities, it has not worked; it has 
been a disaster.  This is clearly unacceptable.  Trying to gloss over the 
situation by claiming all is well, as this Administration seems to want to do, 
is a disservice to all those people who continue to have serious problems 
getting coverage.
	Further, I fear this is just the beginning.  We know plans can change 
their formularies after people have enrolled.  We know they can raise their 
prices-that has already occurred.  That affects what people pay in coinsurance 
and in the period when there is a gap in coverage-the so-called donut hole.  
Again, for people who picked their plans because of the coverage of a certain 
drug or its price, to pull the rug out from under them and change things is 
just plain wrong.
	We know that the success in enrolling subsidy-eligible low-income 
people has been abysmal.  We all know they are the most certain to benefit 
from this program, and yet we are not reaching them.   One major reason for 
this is the complications caused by  the assets test.  We should fix that.  
Yet we have no proposal to do this from the Administration.
	We know that with all this confusion and problems, it is folly to hold 
a threat over seniors in the form of a financial penalty if they don't enroll 
by May 15.  And yet the Administration refuses to support such a legislative 
change.
	In the end, we need the option of a simple Medicare benefit.  That 
should be the first choice available to all beneficiaries.  It should work 
like other Medicare benefits.  It should be the beneficiary's choice if they 
want to select an alternative to traditional Medicare.  And we should use the 
purchasing power of Medicare's beneficiaries to get better prices from the 
drug companies.  This should not be about protecting drug company and 
insurance company profits, but about getting the best price and the best 
coverage for America's seniors.

	MR. BILIRAKIS.  [Presiding]  Well, we don't know how many will be 
returning so that being the case, I hate to be the only one listening to your 
testimony.  I am going to wait about maybe two minutes, if I may, with 
your indulgence.
	[Recess]
	MR. BILIRAKIS.  Into our seats, please.  From here we spend a lot of 
time together these days, actually over the years.  Going all the way back 
to the days when we were the minority, I believe.  Dr. McClellan makes 
up the first panel.  He is the Administrator, as we know, of CMS.  Sir, 
you have 10 minutes.  Please proceed.

STATEMENT OF HON. MARK MCCLELLAN, ADMINISTRATOR, CENTERS FOR MEDICARE & 
MEDICAID SERVICES

        DR. MCCLELLAN.  Okay.  Thank you, Mr. Chairman.  It is a pleasure 
to be here to update you on the implementation of the new Medicare 
prescription drug benefit and I want to particularly thank you for sitting 
here and listening to my opening statement.  I appreciate it.  As a result 
of extensive--
	MR. BILIRAKIS.  Somebody has to do it.
	DR. MCCLELLAN.  Somebody has got to do it, that is right.  As a 
result of extensive outreach efforts, enrollment is off to a strong start in 
the prescription drug benefit.  More than 25 million Medicare 
beneficiaries now are receiving prescription drug coverage and we 
particularly applaud the pharmacists for their tremendous help with this 
new benefit.  The number of Medicare beneficiaries continues to grow at 
the rate of hundreds of thousands of new enrollees in the prescription 
drug benefit each week.  Over 5.5 million people have enrolled 
individually in prescription drug plans.  The vast majority of the new 
enrollees in these stand-alone prescription plans have chosen plans 
offering something other than the standard drug benefit designed by 
Congress.
	Many beneficiaries have chosen coverage with low or no deductible, 
with fixed co-payments instead of co-insurance; it is very predictable, 
and coverage in the coverage gap, as well as other additional benefits 
made possible by the choices available.  Because of strong competition 
among the drug plans, the Medicare prescription drug coverage is costing 
much less than expected.  Premiums are one-third lower on average and 
seniors are saving about $1,100 on average on their annual prescription 
drug cost.  A new CMS analysis demonstrates that Medicare 
beneficiaries with common chronic conditions can save a substantial 
amount on their drug bills by enrolling in a drug plan compared to what 
they would pay without this coverage.
	For example, people with Medicare who select the lowest cost plan 
in their area can save an average of 57 percent on their drug costs with 
savings available because of lower prices, including prices that are 
usually significantly lower than the Medicaid prices negotiated by 
government.  Savings increase to 70 percent or more when beneficiaries 
use generic versions of their drugs, drugs that have the same active 
ingredient and work in exactly the same way.  Savings can be over 80 
percent or more when they switch to drugs in the same class that work in 
a similar way to the drug they are taking now, as Consumers Union and 
many other consumer groups have recommended.
	The analysis also demonstrates that a range of plans available to 
beneficiaries can provide large savings, as well.  In other words, 
beneficiaries can get substantial savings just by focusing in on the 
specific kind of drug plan that they want.  Taxpayers and States are 
saving, as well.  Since last July, the projected cost of the drug benefit has 
dropped by $30 billion over the next five years.  States will spend $37 
billion less than projected over the next 10 years and we recently 
announced $700 million in additional State savings this year alone.  In 
fact, the total spending on prescription drugs in this country is now 
projected to be significantly lower because of the drug benefit, even as 
seniors are getting millions more prescriptions filled at a much lower 
cost.
	Many beneficiaries with limited incomes and resources can save 
even more; 95 percent of the cost of their prescription drugs on average 
by applying for the low-income subsidy.  You will hear more about that 
from someone who is taking advantage of the subsidy on the next panel.  
To identify and enroll beneficiaries who can qualify for this extra help, 
CMS has entered into a new agreement with the National Council on 
Aging.  Through this agreement the NCOA will refine lists of 
beneficiaries to improve the ability to target outreach and enrollment.  
NCOA is also reviewing alternative strategies to supplement and 
improve the ongoing and future outreach efforts for low-income subsidy 
beneficiaries.
	Now, while the vast majority of beneficiaries are using their 
prescription drug coverage effectively and while plans are filling 
millions of prescriptions each day, some people who enrolled or 
switched plans late in the month, especially dual eligible beneficiaries, 
have had problems when filling their prescriptions the next month.  The 
information systems didn't have time to sufficiently reflect these 
changes.  To make people aware of how they can avoid these problems, 
we have undertaken an education campaign.  We are encouraging people 
to enroll early in the month to get coverage the next month.  We have 
updated our online enrollment center messages.  We have modified the 
scripts that our call centers use when people call us at 1-800-
MEDICARE and we are working with pharmacists, States, and advocacy 
organizations to convey this important information.
	We are working to prevent any such problems with switching plans 
and late enrollment in the future and we don't want anyone with 
Medicare to leave the pharmacy without the prescriptions they need.  
Almost everyone who joins or changes plans before the 15th of each 
month, when they sign up on their own, will get their prescriptions filled 
quickly and conveniently the next month.  This allows Medicare and the 
plans time to update systems and plans time to mail important documents 
like proof of enrollment and a membership card before the coverage 
begins.
	Due to the difficulties that some dual eligible and other low-income 
beneficiaries face, States, in many cases, have activated their State 
payment systems to ensure that people receive their medicines.  Through 
a temporary demonstration program, Medicare is reimbursing States for 
supporting the transition of dual eligible beneficiaries to their Medicare 
drug coverage.  We will reconcile drug payments with the prescription 
drug plans and pay any differential between the drug plan reimbursement 
and Medicaid costs because in many cases the Medicaid program is 
paying higher prices than the new competitive drug plans.  We will also 
pay for State administrative costs.
	States are widely participating in this program.  Of the States that 
are participating, the vast majority either did not activate their State 
payment system and are seeking only reimbursement for administrative expenses, 
or they have a very low rate of using their State claim systems.  Most 
States are using their State billing system for only a small share of 
prescription drug claims, averaging one prescription or less per pharmacy 
each day.  In Florida, during the time of this reimbursement program, 
fewer than a hundred prescriptions have been filled through the State 
system, for example.  Most States are working closely with us, using our 
backup systems and caseworkers, if needed, to make sure that all 
beneficiaries are getting the drugs they need and in the vast majority of 
cases, avoiding the need for State billing.
	As we continue the implementation of this new program, we are 
learning from our past experiences.  We will apply these lessons in the 
future in the guidance we provide to the plans, physicians, pharmacists, 
and our other partners.  I want to thank you again for this opportunity to 
discuss our progress during the first two months of the most important 
new benefit in Medicare in 40 years, the new and overdue prescription 
drug coverage.  While we are pleased that millions of Medicare 
beneficiaries are getting their coverage used effectively every day, 
getting prescriptions filled every day, we are going to continue working 
to ensure that everyone with Medicare can use this coverage smoothly 
and effectively.  I am happy to answer any questions that you all may 
have.
	[The prepared statement of Hon. Mark McClellan follows:]



PREPARED STATEMENT OF THE HON. MARK MCCLELLAN, ADMINISTRATOR, CENTERS FOR 
MEDICARE & MEDICAID SERVICES

 

        MR. DEAL.  Thank you.  Let me, first of all, start with the New York 
Times article that was alluded to by Mr. Dingell and several of us have 
seen, and that is with regard to people who may have been enrolled in 
two plans and whether or not they are going to be charged the premiums 
out of their Social Security for two plans.  What precautions have you 
taken and what are your plans to be able to unravel that particular 
problem?
	DR. MCCLELLAN.  Mr. Chairman, in the first two months of the 
program, about 800,000 people with Medicare have switched plans in an 
effort to get into the plan that best meets their needs.  The vast majority 
of these people are dual eligible beneficiaries with Medicare and 
Medicaid.  A large number of these beneficiaries are using their new plan 
effectively, but some of them do have coverage that is active from both 
plans.  We have been careful about turning off the payments from the old 
plan, the original plan, because we want to make sure that these 
beneficiaries get the drugs that they need at the pharmacy.
	Sometimes these switches have been done by States acting on behalf 
of their beneficiaries and the beneficiaries may not know about it.  The 
switches may occur late in the month and a beneficiary might show up at 
the pharmacy early in the next month and the information may not have 
fully caught up, so we want to make sure that the beneficiary does have 
coverage when they go to the pharmacy and we are conducting 
reconciliation between these plans in order to make sure that the 
payments work out appropriately.
	We are encouraging beneficiaries to enroll earlier in the month, as I 
just said, to prevent this kind of problem from happening and when they 
do, they will be able to use their new plan smoothly.  Now, because the 
vast majority of the people who are in this situation are dual eligible 
beneficiaries, they don't have any Medicare premium to pay, so they are 
not going to be billed by Social Security for any double premium.  They 
won't be billed for any premium at all.  To make sure that the 
information on eligibility for extra help goes to the new plan, as well as 
the old plan, in a timely way, so beneficiaries are charged the right co-
payment, we not only send out this information when the enrollment 
comes in from the new plan, we also have sent out a number of special 
files that the plans can use to make sure their co-payment information is 
up to date.  As a result of these kinds of steps, we have seen far fewer 
cases of problems with co-pays for these individuals or a problem with 
premiums and the like.
	So we have seen a large number of people switch plans.  For many of 
them, the new plan is the plan that is active and is working just fine.  We 
want to make sure that nobody leaves the pharmacy without their 
prescription and so we are reconciling the payments for these plans and 
we will finish working on these issues in the next few weeks.
	MR. DEAL.  One of the concerns that you heard voiced by several of 
the panel already is, and I think it is a misconception, and that is the 
ability of a plan to change its pharmaceutical list of covered 
pharmaceuticals.  You and I have had a conversation about that.  Would 
you walk through the process whereby if a plan wants to change their 
formulary, what they would have to do and would you also talk about 
why that might be a very good thing to have happen?
	DR. MCCLELLAN.  Sure.  As a background, we review the 
formularies that plans start with to make sure that they meet the 
requirement that beneficiaries are going to be able to get access to the 
drugs they need.  The formularies used by the Medicare drug plans are 
broader than the VA formulary and broader than many Medicaid 
preferred drug lists to make sure that people can get access to the 
medicines that they need.  In order to change a drug on a formulary, the 
plan must first go through what is called a P&T Committee; this is a 
committee of experts that review, including independent experts, that 
review whether the change in the formulary is medically appropriate, and 
that happens before it even gets to us.
	When it comes to us, we go through the same kind of process that 
happens when we approve the formulary in the first place and make sure 
that the drug coverage is broad, and that people will be able to get access 
to medically necessary treatments.  Even after we give our approval, the 
plan must go through a period of notifying beneficiaries with at least a 60 
day advance notice, before it takes effect.  Now, with all these kinds of 
steps, it probably won't surprise you to hear that we have had no requests 
from plans to change their formularies since the drug benefit formularies 
were announced last fall.
	MR. DEAL.  We are going to hear from the representative that 
Representative Allen alluded to from his State of Maine in the next panel 
with regard to problems that they may have encountered.  Is Maine one 
of those States that is a model State for purposes of the plan you 
previously alluded to and is Maine one of those States that waited toward 
the very end of the year to make a transfer of their dual eligibles and if 
so, was that part of the problem there?
	DR. MCCLELLAN.  Well, we have been trying to work very hard with 
the State of Maine and other States that have been at the higher end of 
using their State systems.  Like I said before, the vast majority of States 
either aren't using any State billing at all, or they are using it for only a 
very limited number of claims, including fewer than a hundred for the 
whole State of Florida, and a few thousand for the State of Pennsylvania 
for all of their low-income beneficiaries.  Now, Maine did switch some 
people in plans late in December and there are still some issues with the 
data coming in from Maine.  For example, we have heard from a number 
of nursing home chains and others that they are not getting the right 
information on beneficiary location for their dual eligibles.  There is a 
different co-pay for beneficiaries who are in nursing homes.  They don't 
pay any co-pay at all and we will rely primarily on information from the 
State for where those dual eligible beneficiaries are located.
	We are going to keep working closely with the State and you will 
hear from the State later today.  They are working very hard on this with 
us.  I can tell you that the number of claims that Maine is submitting to 
us through their State system has gone way down from what they were in 
January and we have sent some special data teams to Maine to help work 
out these issues, as well, and we are going to keep working closely with 
them until they get resolved.
	MR. DEAL.  Ms. DeGette.
	MS. DEGETTE.  Mr. Chairman, I will defer to one of my colleagues.  
I need a minute to get ready.
	MR. DEAL.  Ms. Capps will be next.
	MS. CAPPS.  I thank you, Mr. Chairman.  Dr. McClellan, again, 
thank you.  I want to touch briefly on a lot of topics, but I want to tell 
you about a young man who is a constituent who is being treated by a 
specialist at UCLA for a specific condition requiring him to take 
Prevacid four times a day.  When he was covered by Medicaid, he 
received this dosage prescribed by his doctor.  Now he is enrolled in a 
Part D plan and only approved for 60 tablets per month, which is only 
half the dosage his doctor prescribed.  The doctor prescribed a certain 
amount for his need.  I have always been concerned that insurance 
companies practice medicine and dictate the amount of medicine 
covered.  Now, though, it seems that this practice, through Medicare and 
Medicaid, is being extended to our most vulnerable, often weakest and 
sickest patient.  I am concerned that the patients have to go through such 
an arduous appeal process and I am wondering what you are doing, very 
briefly, to ensure that insurance plans provide immediate coverage, not 
only for the type of medicine but also for the quantity and the way that it 
is prescribed by the physician?
	DR. MCCLELLAN.  Well, many plans do have limits on the number 
of prescriptions, or the dose, or the number of pills provided.
	MS. CAPPS.  Contrary to the doctor?
	DR. MCCLELLAN.  Well, in some cases this is for safety reasons and 
the like, but there needs to be a fast appeals process for resolving that.  
MediCal does this.  I actually prescribed under MediCal, as you know.
	MS. CAPPS.  I know, yes.
	DR. MCCLELLAN.  And I filled out a lot of prior authorization 
requests for increasing doses beyond the usual approved amount.  Every 
plan in Medicare must have a fast process for resolving that issue with 
the physician.  If it is an urgent issue, the plan needs to get back to the 
physician.
	MS. CAPPS.  You are working on a faster plan, then?  Am I hearing 
you say that?
	DR. MCCLELLAN.  Well, if it is an urgent issue, the plan needs to get 
back to the physician within 24 hours.  If the plan doesn't resolve it 
promptly, it is an appeal that gets handled independently by a Medicare 
reviewer and if it hasn't happened in this case, that is exactly what our 
complaint lines and assistance--
	MS. CAPPS.  But it is taking a long time.
	DR. MCCLELLAN.  Well, it shouldn't take long and I hope you will 
send me the specific information on that case.
	MS. CAPPS.  I will send you the specific information, but I want to 
move on.  I listened to your response to Mr. Deal and because I have 
been really concerned about fairness.  Insurance companies can switch 
around, and patients have to go through this arduous process.  Even 
though you answered him and I still believe that there are ways that 
insurance companies, through the different tier levels and also because 
they don't even have to notify a patient that they have changed, and they 
can just post it on the web site.  You know a lot of these seniors do not 
have access to web sites, so I just want to register that, but I want to 
move on because I have two more questions to ask you.
	One has to do with proposals in Congress to extend the enrollment 
deadline past May 15.  Maybe this, because they are all coming from the 
minority side, just has to be rejected out of hand, but I am imploring you 
to see if there is some way that we can get the Administration to 
acknowledge that we need to delay the deadline of May 15.  I am afraid 
we are going to hear--I mean, we heard loud and clear on January 1st and 
the few days after that, but now we are going to find out that very vocal 
Medicare recipients are going to run into that deadline and still be as 
confused as they are telling me today.
	So that is one question, but I want to ask another one right away, but 
get an answer to both of these.  There is certain evidence that some plans 
are providing incentives to sales agents and encouraging employees to 
entice beneficiaries into signing up for HMOs instead of just the 
prescription plans.  There is a reason the insurance companies haven't 
switched their plans yet, because they are still sweetening, they are trying 
to enroll beneficiaries, so they are going to make it really nice for them.  
I am sorry if I sound cynical about this, but I want to know what steps 
you are taking to protect beneficiaries who are elderly and/or disabled 
from being lured into HMOs when the stand-alone prescription benefit 
would actually be best--and you have acknowledged that this is still one 
of their choices.  It may be the best and the most affordable coverage for 
them.
	DR. MCCLELLAN.  Oh, absolutely.  Stand-alone prescription plans 
are available everywhere.
	MS. CAPPS.  But they are being enticed and baited into joining up 
with HMOs and they are going to be left high and dry.
	DR. MCCLELLAN.  Well, the insurance agents are subject to two 
kinds of oversight.  First of all, they are overseen by every State.  Every 
State has a process, since this is a professional agent for licensing and for 
oversight of their practices and second, Medicare has its own oversight 
of agents that are involved in selling Medicare policies to make sure that 
information is presented objectively and that beneficiaries are not given, 
or that agents are not giving inappropriate financial incentives this year 
and we would be happy to share the details of that.
	MS. CAPPS.  Can I get some evidence of this so I can use it on your 
behalf in fairness to my beneficiaries?
	DR. MCCLELLAN.  Absolutely.  And again, if we hear about any 
complaints, we will take action.  We have sanctioned several plans for 
marketing violations, not particularly-
	[The information follows:]

        CMS takes its responsibilities for monitoring and enforcing plan 
compliance with Part D program requirements very seriously. Our aggressive 
oversight of prescription drug plan sponsors has resulted in well over a 
thousand compliance actions this year. Specific examples of compliance 
activities in the marketing area since last year relate to agent 
misrepresentations or other misconduct, marketing prior to October 1, 2005, 
use of unapproved marketing materials, and enrollment systems failures. 
        CMS uses the full range of available enforcement tools in pursuing 
plan compliance with Medicare program requirements. This includes issuing 
numerous corrective action plans and compliance warning letters. Usually, 
these steps lead to prompt, responsive actions by plans. However, where 
necessary to achieve compliance, CMS will levy civil monetary penalties and 
implement intermediate sanctions such as freezing marketing and enrollment. 
Where necessary, we will also terminate plans. CMS' compliance and 
enforcement program emphasizes analysis of complaints and plan-reported data, 
along with routine and focused program compliance audits. We are structuring 
the audits in a way that ensures independence and unbiased objectivity. We 
have and will continue to consider information on plan performance annually as 
we make contracting decisions for future years - including decisions on 2007 contracts.

	MS. CAPPS.  I just want to get a final yes or no answer to my 
question.  Will you extend the deadline?
	DR. MCCLELLAN.  We are focused right now on giving everybody 
help with signing up.  The wait times are down now, under a minute for 
people who call 1-800-MEDICARE.  We are helping--
	MS. CAPPS.  There are millions of people who haven't signed up.
	DR. MCCLELLAN.  And as you have seen the savings are even larger 
than expected, hundreds of thousands of seniors are signing up every 
week.
	MS. CAPPS.  So you are not committing to extending it?
	DR. MCCLELLAN.  That is what we are focused on right now.  I have 
heard from not only Minority members, but Majority members who are 
widely concerned that every senior should have an opportunity to sign up 
and that is why we are working so hard right now making sure that every 
senior does, so let us keep talking.
	MS. CAPPS.  Thank you.
	MR. DEAL.  Mr. Bilirakis.
	MR. BILIRAKIS.  Mr. Chairman, I am really pleased to hear Ms. 
Capps go into details here on problems now or potential problems or 
whatever because that is what we should be doing.  We should be 
focusing really on that rather then the partisan rhetoric that we hear 
sometimes during the opening statements.  I would not endorse her 
question, necessarily, but her point that there be a need for an extension 
and if it looks like that is going to be the case, I will tell you, I will be 
one of the first people who will be insisting that we do have an extension 
there because again, our goal is to give everybody an opportunity to 
enroll.  We all admit there are complexities here and things of that nature 
that may result in some people not being able to enroll in time, so 
hopefully, Mark, we all have an open mind.  We have asked them to 
have an open mind, we should also have an open mind on some of these 
things, particularly that area.
	I would ask you, sir, step by step; I am an 83 year old beneficiary, I 
am either computer illiterate or don't have access to one.  Take me 
through the process.  I have decided, in spite of what I might read in the 
newspapers and whatnot, I have read the AARP magazines or whatever 
the case might be or my neighbors have told me hey, I should enroll so I 
decided to enroll.  Step by step.
	DR. MCCLELLAN.  Well, I have actually talked to a lot of seniors in 
that situation down in Florida where we have a lot of organizations 
working with us to help make sure people like the 83 year old man that 
you mentioned can get their questions answered and can sign up for a 
plan.  There are lots of ways to get help.  One is by calling 1-800-
MEDICARE, another is by looking for the events that are taking place 
on an ongoing basis.  We have had several thousand since the year began 
already, on an ongoing basis, in your district and in his community to 
find out more about this program.  We also partner with the Florida State 
Health Insurance Assistance Program that can provide--
	MR. BILIRAKIS.  Well, forgive me.  And they can go to some of the 
pharmacists and they help them and I know some of the physicians help, 
but let us say they passed that point and they decided they want to enroll.
	DR. MCCLELLAN.  Okay.
	MR. BILIRAKIS.  What do they do?
	DR. MCCLELLAN.  All right, they can call 1-800-MEDICARE and 
we will walk through enrollment with them on the phone and take them--
	MR. BILIRAKIS.  Okay, so that is enrollment.
	DR. MCCLELLAN.  That is right.
	MR. BILIRAKIS.  Okay.
	DR. MCCLELLAN.  If they still want help--
	MR. BILIRAKIS.  Is that the only method of enrollment?
	DR. MCCLELLAN.  No, there are paper applications, as well, that you 
can fill out.  You can call the plans directly.  You can work through one 
of these many partner organizations.  The enrollment form, itself, is just 
a page, front and back, it takes us a matter of minutes to fill out.
	MR. BILIRAKIS.  Okay, so now they are enrolled and they have 
already chosen the plan.  When they have enrolled, it shows in the plan, 
which can be a problem, too.  I mentioned in my opening statement 
about sitting in with pharmacists and I know some of them are, I guess, I 
don't know whether they are mandated but they are certainly encouraged 
by their employers, by the company to be very helpful.
	DR. MCCLELLAN.  Yes.
	MR. BILIRAKIS.  Now, what is the history there?  Are we finding that 
most pharmacists are educated well enough to be able to do this and are 
willing to do it?  How do we stand as far as that is concerned?
	DR. MCCLELLAN.  I think the most important thing is that we have 
seen pharmacists all over the country demonstrate the professionalism of 
their work and their devotion, really, to helping patients get the 
medications they need.  Independent pharmacists, chain pharmacists, 
they have all been working very hard to help people take advantage of 
the program and when there were, especially early in January, these 
enrollment problems, where the data were not available that they needed-
-
	MR. BILIRAKIS.  Okay, they admit they had problems in January?
	DR. MCCLELLAN.  Yes.  They solved those problems themselves.  It 
is a tremendous effort.  Now, many of those pharmacists are benefiting 
from the fact that the wait times have come way down.  If a pharmacist 
calls our toll free help line for pharmacists, they have no waiting at all.  
The plan wait times are generally now in the five minute range; many 
plans, lower than that.  That is all very important progress, but it is still a 
lot of work for pharmacists.  You are going to hear from some later who 
have some very good ideas about how this process can be improved even 
further, steps like getting more standard messages back from the 
different drug plans when a prescription is not approved so they will 
know exactly what to do; they won't have to look it up in a manual.  
Steps like getting more standardized forms for--
	MR. BILIRAKIS.  That is needed greatly.
	DR. MCCLELLAN.  That is right.  And so those steps are coming, as 
well.  Many pharmacists spent a lot of time in preparation, but especially 
for the independent pharmacists, they have limited resources, they are 
very busy running essentially a family business and they have a lot of 
things going on at the same time, so we have also worked through their 
associations, through their software vendors, through the different--
through the wholesalers.  Representative Buyer mentioned earlier about 
the need to get the payment timing matched up now with this new 
system, to help provide some additional relief for the burdens that they 
are facing now.  I think there is more that we can do there.  We have seen 
a lot of progress in just eight weeks in the program, but there are more 
steps that we can take and I truly appreciate the constructive ideas and 
support from pharmacists in helping us.
	MR. BILIRAKIS.  And I agree with you.  Thank God for them and 
they have said the same thing to me, that January was a really horrendous 
month but things have really smoothed out and of course, there is the 
reimbursement, what they are compensated, a dollar and something per, 
what is it, per prescription?
	DR. MCCLELLAN.  We want to make sure that the reimbursements 
happen according to the contract schedule, so any pharmacists who are 
not being paid according to their contracts, we want to hear about it.  We 
will investigate those further and make sure the plans are living up to 
their--
	MR. BILIRAKIS.  Thank you for all your work, Doctor.
	MR. DEAL.  Ms. DeGette.
	MS. DEGETTE.  Thank you, Mr. Chairman.  Mr. Chairman, in the 
absence of the committee Chairman, I just want to say that several of the 
Majority members said in their opening statements the Democrats 
wanted this program to fail and all we were was critical of it and in truth, 
while all of us voted against the bill in the first place, it passed and we 
felt like we had a duty to our constituents to tell them they needed to 
enroll in this program, if, in fact, when it passed.  So for people like me, I 
sent a mailing out to my seniors, Ms. Capps is nodding.  She did it, too.  
We sent mailings out telling them how to enroll.  We had town hall 
meetings and forums.  We did everything we could and are continuing to 
do everything we can even though we think it is a bad program.  We 
don't think it is going to work too well.
	We think that our constituents should sign up and I think the record 
should reflect that because we all are really trying to make it work, but 
what frustrates us is that many people seem to be denying that there are 
some pretty massive problems with this program and Dr. McClellan, I 
know that you agree that there are some issues that need to be resolved 
still, so that is kind of what I want to explore with you this afternoon.
	I was heartened to hear Chairman Barton say that in his State, or in 
his district, people seem to be signing up for this program because in 
Colorado, my home State, we have over 529,000 Medicare beneficiaries; 
353,000 of them have drug coverage, but only 46,000 beneficiaries have 
actually signed up for the stand-alone PDP and the rest are either in 
Medicare Advantage, they are dual eligible and so they are automatically 
enrolled or they have retiree drug coverage through their former 
employer, so that leaves about 176,000 beneficiaries in Colorado who 
have yet to sign up for the plan.  So my question is how are we going to 
get these--and I know this is not unique to Colorado.  I don't think we are 
the worse State on this.  My question is how are we going to get these 
remaining 80 percent of people who haven't signed up for a stand-alone 
PDP to do so by May 15th?
	DR. MCCLELLAN.  Well, Congresswoman, as you know, about two-
thirds of the beneficiaries in Colorado are getting coverage now and 
thousands more signed up in the last four weeks alone.  There are events 
that are taking place--
	MS. DEGETTE.  Right, 46,000 have signed up and that is out of 
529,000 Medicare beneficiaries.  Now, some of them have Medicare 
Advantage, as I said.  Some have private coverage, so are we just not 
worrying about getting them enrolled?
	DR. MCCLELLAN.  All those beneficiaries are very important to us.  
Close to 300,000 of the beneficiaries in Colorado have coverage now.  
Many are getting--
	MS. DEGETTE.  But not though this Part D program.
	DR. MCCLELLAN.  Well, but they don't all need to get it through 
stand-alone plans.  Medicare Advantage plans are more widely available 
than ever before and we have had half a million people sign up for 
Medicare Advantage plans just in the last four weeks.  And in the last 
four weeks alone, we saw thousands of people enroll in stand-alone 
prescription drug plans, as well, so people in Colorado are finding out 
about this program.  I think that there are a lot of ways that we can keep 
working together to help make sure even more can take advantage of it.  
We have partners working with--
	MS. DEGETTE.  So let me ask you this.  What I am hearing you say, 
then, is if people are in other programs aside from the stand-alone PDP, 
you are not really worried about them, right?
	DR. MCCLELLAN.  I am worried about making sure that everyone 
gets the support they need to make a decision about this coverage.
	MS. DEGETTE.  Okay, that is going to be 176,000 in Colorado alone.  
By May 15th, how is that going to happen?
	DR. MCCLELLAN.  Well, a lot of those beneficiaries already have 
coverage from the VA or they are already getting coverage from 
elsewhere and don't want to sign up.  Many people may go ahead and 
make an enrollment decision and those are the ones, the people who--
	MS. DEGETTE.  How many is that?
	DR. MCCLELLAN.  It could be--
	MS. DEGETTE.  You don't know.  I mean, you can't say off the top 
of your head.
	DR. MCCLELLAN.  Well, I can't say off the top of my head because 
many people in Colorado get covered through the VA or they have 
another source of coverage already.
	MS. DEGETTE.  So you are just not going to worry about getting 
them enrolled.
	DR. MCCLELLAN.  I am absolutely worried about getting them 
enrolled and that is why we are--
	MS. DEGETTE.  Well, how are we going to do it?  It is 80 percent of 
the people and I understand some of them have other coverage, but 
starting May 15, they are going to start to be penalized if they, 1 percent, 
and it compounds if they don't enroll in it.
	DR. MCCLELLAN.  That is why we want them to hear about this 
program now and know that there are lots of places they can go for help 
if they have questions about enrollment.  They can call 1-800-
MEDICARE--
	MS. DEGETTE.  Okay, with all due respect, they have heard about it.  
They have heard about it from me.  They have heard about it from TV.  
They are confused or they are mad or they are whatever and they are not 
signing up, so why is the Administration so dead set on enforcing this 
May 15th deadline which is, it is going to affect all these people who 
have coverage other places.
	DR. MCCLELLAN.  Congresswoman, what I was just trying to answer 
is the places that they can go right now to get their questions answered.  
You said they have questions, you said they want to get more 
information.  What I hope we can focus on is the places that they can go 
and the resources available to them to get their questions answered, like 
calling 1-800-MEDICARE or--
	MS. DEGETTE.  Okay, can I say something?  As far back as last fall, 
they have known that and May 15th is coming up and they are not doing 
it for whatever reason.
	DR. MCCLELLAN.  Well, I am not sure all of them do know that.  We 
have been trying very hard to make sure people know where they can 
call and I appreciate your help in town hall meetings and the like to get 
the word out.  Many people, though, seem to be getting the wrong 
impression that this is a benefit that is only for people in HMOs.  That is 
not the case and I want to make sure we are getting the facts out with 
you.
	MS. DEGETTE.  Okay.  So you think you can get everybody enrolled 
by May 15th?
	DR. MCCLELLAN.  I want to do all we can to help.
	MS. DEGETTE.  Yes or no.  Can you get them all enrolled by May 
15th?
	DR. MCCLELLAN.  This is a voluntary program.  Not everybody may 
choose to enroll in the program.
	MS. DEGETTE.  Okay.
	DR. MCCLELLAN.  What we want to do by May 15th is make sure 
that everyone has an opportunity to find out and to make a decision about 
the coverage because they can save a lot of money and get--
	MS. DEGETTE.  Okay.  You don't need to sell the program to me.  I 
know a little bit about it.
	DR. MCCLELLAN.  I know you do.
	MS. DEGETTE.  But let me ask you another question.  For these dual 
eligibles, the low-income Part D folks, a lot of those people have applied 
and they are waiting for their applications to be approved before they 
sign up for a plan because in large part, they can't afford to do it without 
a subsidy.  Now, SSA's deadline for processing the applications extends 
beyond the May 15th deadline for beneficiaries to sign up for a plan 
without a penalty.  So my last question to you is if a low-income 
Medicare beneficiary doesn't hear about their subsidy until after May 
15th, then they are going to incur a 1 percent penalty for the rest of their 
lives for not signing up earlier.  Has your agency considered doing 
something about those people because there are two separate deadlines 
and one is later than the other?
	DR. MCCLELLAN.  That is a very good point.  We have been 
working with Social Security on ways to get their processing time down, 
the time to get this information in the system, so I would like to talk with 
you further about additional--
	MS. DEGETTE.  Okay, would you be willing to consider, for those 
folks, extending the deadline for the penalty past May 15th?
	DR. MCCLELLAN.  For people who are low-income, who have tried 
to--
	MS. DEGETTE.  Who have applied.
	DR. MCCLELLAN.  --get enrolled in the program, who have applied, 
if you want to--
	MS. DEGETTE.  And they have not heard--
	DR. MCCLELLAN.  Absolutely.  We want to find a way for them to 
take advantage of the program and I would be delighted to--
	MS. DEGETTE.  And so would you be willing to consider extending 
past May 15th for that group of people the, for waiving the penalty.  
Would you be willing to consider that, yes or no?
	DR. MCCLELLAN.  I am willing to consider the best--
	MS. DEGETTE.  Thank you.
	DR. MCCLELLAN.  --approaches to make sure they can take 
advantage of the benefit.
	MS. DEGETTE.  Thank you.
	MR. DEAL.  Mr. Buyer is recognized for questions.
	MR. BUYER.  Dr. McClellan, I have great respect for the job that you 
have in front of you.  What I would like for you to know that those who 
ride the unicorn and dream are not just individuals in our own society 
that have some socialist view.  Let us go to a socialist country for a 
second, okay?  Let us go to one, okay.  So let us go to their dreamland 
for a moment.  Oh, this is a wonderful newspaper here, right?  The 
International Express, United Kingdom.  Look at this.  "The cancer drugs 
ruling scandal."  The courts made a ruling.  Now, those of who even ride 
the unicorn in a socialist system are upset in Great Britain.  Why?  Let us 
figure out why.
	See, the ruling condemns women to death in the United Kingdom.  
What is this about?  So the courts rule that the national health system 
primary care trust, they couldn't force the trust to give Herceptin to 
women with breast cancer.  So here we have this whole situation again.  
You have a blockbuster drug.  People, not only in America, but around 
the world have this expectancy of a right to a drug at a cost for which 
they are only willing to pay.  Wow.  That is this fantasy world out there 
that somehow--how are we ever going to be able to achieve these great 
blockbuster drugs that can save human life, Doc?
	So I just want to let you know that the challenge for which you are 
facing, okay, is by the riders of the unicorn that are not only in America, 
but they are also all over the world, okay?  I just found this rather 
intriguing, so it is not just you, okay?  So those who ride the unicorn, I 
guess, have this expectancy and right that everybody ought to be able to 
get a drug, equal basis for free, are the same belief that everybody ought 
to drive the same type of automobile.  That is why earlier I said the dead 
horse is the command economy.  It was in Russia and it failed.
	Let me ask this question.  Earlier on in my opening comments, I 
asked you about this difference between the word that you used in your 
national letter about requested versus required, so this will go to your 
authorities.  So trying to make sure that the plans are responsive to the 
pharmacists, tell me what you perceive your authorities are with regard 
to these plans.
	DR. MCCLELLAN.  We have extensive authorities to make sure that 
the plans fulfill their contractual obligations to provide timely access to 
drugs and timely reimbursement according to contracts with the 
pharmacies.  That authority has been used to take steps like making sure 
that the transition period was extended in order to accommodate the fact 
that many beneficiaries couldn't get through to their plans early in 
January and that not enough steps had been taken to successfully 
implement prior authorization appropriately and effectively for all 
beneficiaries.  	
It is authority that we are using to make sure that if a pharmacist has 
a complaint about how they are being paid, about whether their payments 
are being made according to contractual schedule, that we can look into 
that, and if we see patterns of abuse that the plans don't respond to 
quickly, we can take further actions.  We have a range of further actions 
we can take when necessary that goes all the way up to suspending 
enrollment in the plan or eliminating it from the prescription drug 
program.
	MR. BUYER.  With regard to individuals who are communicating 
directly with the pharmacist, one of the concerns has been will the 
message or the answer be consistent?  You know, all these pharmacists, 
they all know each other.  They are all trying to work through it, too.  So 
my question is are you working on a standardization of the 
communication?
	DR. MCCLELLAN.  We are and we have seen a lot of leadership in 
making that happen from the pharmacy community.  Some of the 
representatives of the independent pharmacists and the chain pharmacies 
are working with the drug plans to come up with what those standards 
should be and we have already seen some early benefits of that work.  
For example, this past week this collaboration of plans working with 
pharmacies and other groups sent a letter to the standard setting 
organization to request that standards be added in certain areas where 
plans have been getting different kinds of messages back.  Now, I think 
we are going to see more of that in the weeks ahead.
	MR. BUYER.  Would you address the concern I raised earlier about 
what I title economic defibulation?  How we are actually going to be able 
to put all this on a proper cycle to give everybody back--
	DR. MCCLELLAN.  That is a good question.  We have already had 
some discussions with wholesalers and distributors who have made 
adjustments in many cases in their payment schedules to accommodate 
some of the payment issues, especially back in January when there was 
this gap between when the Medicaid payments and the cash payments 
stopped and the drug plan payments started.  I think pursuing that to 
make sure that the payment systems work as smoothly as possible for 
pharmacists--
	MR. BUYER.  We want to work with you.  Thank you.
	DR. MCCLELLAN.  We will do that.
	MR. DEAL.  Mr. Dingell is recognized for questions.
	MR. DINGELL.  Mr. Chairman, I will be submitting a letter to the 
witness requesting answers to a series of rather complicated questions for 
which there is not time at this moment.  I ask unanimous consent that the 
record remain open and that I be permitted to insert the same into the 
record?
	MR. DEAL.  Without objection.
	MR. DINGELL.  Thank you, Mr. Chairman.  Witness, these question 
are--I have tried to craft them in a way that if you would choose to 
answer yes or no because of the difficulty that we confront in dealing 
with the complexity of this question.  So if you can, yes or no.  Isn't it 
true that CMS does not know how many of the top 100 drugs used by 
seniors are subject to prior authorization across all stand-alone Part D 
plans?
	DR. MCCLELLAN.  Well, yes.  The plans have told us--
	MR. DINGELL.  Thank you.  Now, let me proceed, if you please.  
Isn't it also true that, as you mentioned on page 34, that CMS does not 
have procedures such as time frames for exceptions and appeals in order 
to define how the appeals and the requests for relief from the 
bureaucratic processes of the insurance plan are attended to?
	DR. MCCLELLAN.  Yes, we do have time frames and--
	MR. DINGELL.  You do?
	DR. MCCLELLAN.  We do have time frames for exceptions and 
appeals and the time frames for urgent exceptions where the beneficiary-
-
	MR. DINGELL.  I would appreciate it if you would submit to us a 
clear statement of what it is that the rights of a citizen are and how you, 
at HHS, standardize these matters?
	DR. MCCLELLAN.  Well, we would be glad to do that.
	[The information follows:]

INSERT FOR THE RECORD OF THE HON. MARK MCCLELLAN, ADMINISTRATOR, CENTERS FOR 
MEDICARE & MEDICAID SERVICES

There are five levels of the appeals process that an enrollee may appeal to:



Level

Standard Appeal
Expedited 
Appeal*
1
Redetermination 
by Part D Plan
If the Part D plan's initial coverage 
determination is unfavorable, an 
enrollee may request a 
redetermination and the plan has up to 
7 days, to make its decision.
Same as standard 
except the 
timeframe is up to 
72 hours for the 
plan to make its 
decision. 
2
Reconsideration 
by Independent 
Review Entity 
(IRE)
If the Part D plan's redetermination is 
unfavorable, an enrollee may request a 
reconsideration by an IRE, which is a 
CMS contractor that reviews 
determinations made by a plan.  The 
IRE has up to 7 days, to make its 
decision.
Same as standard 
except the 
timeframe is up to 
72 hours for the 
IRE to make its 
decision.
3
Administrative 
Law Judge 
(ALJ)
If the IRE's reconsideration is 
unfavorable, an enrollee may request a 
hearing with an ALJ if the amount in 
controversy requirement is satisfied.
Not applicable.
4
Medicare 
Appeals Council 
(MAC)
If the ALJ's finding is unfavorable, the 
enrollee may appeal to the MAC, an 
entity within the Department of Health 
and Human Services that reviews 
ALJ's decisions.
Not applicable.
5
Federal District 
Court
If the MAC's decision is unfavorable, 
the enrollee may appeal to a Federal 
district court, if the amount in 
controversy requirement is satisfied.
Not applicable. 
*An expedited decision is requested based on the urgency of an enrollee's health 
condition.

        CMS and Part D plans will be providing a considerable amount of 
information to beneficiaries, caregivers, patient advocacy groups, providers, 
and the general public about coverage determination and appeals processes so 
that all Medicare beneficiaries receive medically necessary drugs and their 
continuity of care is preserved.  CMS will be monitoring plans and reviewing 
beneficiary's complaints to ensure that plans do not engage in discriminatory 
practices.  Enforcement actions will be taken against plans that 
violate Medicare's requirements. 

	MR. DINGELL.  I note, again, yes or no, CMS does not have good 
data on how many of the drugs in the six protected classes, that is mental 
health drugs, cancer drugs, et cetera are still subject to prior authorization 
across plans, yes or no?
	DR. MCCLELLAN.  For people who are already stabilized on the 
drugs--
	MR. DINGELL.  Six protected classes.
	DR. MCCLELLAN.  They are generally not subject to prior 
authorization.
	MR. DINGELL.  They are not?
	DR. MCCLELLAN.  They are not.  If people are already stabilized on 
a certain drug, they can continue using that drug.  For someone who is a 
new user, the prior authorization procedures do need to be noted by the--
	MR. DINGELL.  What happens when the beneficiary goes to the 
pharmacist?
	DR. MCCLELLAN.  If the beneficiary is already taking drugs that they 
need for their mental health, for their mental wellness, the beneficiary is 
getting covered for those drugs and millions of our beneficiaries are 
getting that coverage right now.
	MR. DINGELL.  What protection do you give the beneficiary against 
unaffordable cost sharing?
	DR. MCCLELLAN.  Beneficiaries with limited incomes have a 
tremendous benefit where they are paying only $1 in $3 in cost sharing 
for their drugs.  The beneficiaries--
	MR. DINGELL.  The answer really is nothing.
	DR. MCCLELLAN.  I think the answer is that millions of beneficiaries 
have new coverage that they didn't have before so they can afford the 
drugs that they couldn't in the past.  That is why we are seeing so many 
more prescriptions being--
	MR. DINGELL.  Let us hope that the beneficiary has the good eye of 
the Lord, the good ear of the Lord because I am not sure he will get 
much help from the agency.  Now, let us talk about this.  CMS cannot 
provide me the number of beneficiaries that have been denied or failed to 
get medicines they were told were on the formulation or rather, on the 
formulary because of prior authorization procedures.  Is that correct or--
	DR. MCCLELLAN.  We will be reporting on complaints that 
beneficiaries bring about prior authorization or formularies not being 
followed.  We will be making that information public in the coming 
weeks.  We are just gathering that now.  We are only eight weeks into 
the program and our focus has been on identifying problems and getting 
them solved individually so that beneficiaries get the medicines they 
expect.
	MR. DINGELL.  Let me just ask you a simple question.  If you don't 
know how many people have been denied, how then can you say this 
plan is working well?
	DR. MCCLELLAN.  Because we know that millions of prescriptions 
are being filled and we know that when a beneficiary has a complaint 
and brings it to us, we work with the plan to solve that complaint.
	MR. DINGELL.  You are one of the more trusting people that I have 
had before this committee as a witness.  Isn't it true that many Part D 
plans have higher cost sharing than is usually seen in commercial plans, 
yes or no?
	DR. MCCLELLAN.  The drug plans had a benefit design that is less 
generous than some employer plans.  The drug benefits are providing 
more than 50 percent savings for people with Medicare.
	MR. DINGELL.  Thank you very much.  Now, don't we have a 
situation where there is no clear way that a complainant or a covered 
beneficiary can know that he or she has a standard right to appeal from 
denial or non-coverage on the formulary?
	DR. MCCLELLAN.  Beneficiaries can get that information from many 
different sources.  They can call 1-800-MEDICARE, you can get from--
	MR. DINGELL.  What are the rules the Department has to assure that 
there is such a standard mechanism?
	DR. MCCLELLAN.  When an appeal comes in to us, it is handled by 
an independent Medicare reviewer not connected with the plan, who 
follows a standard set of procedures.
	MR. DINGELL.  I am not asking you how you handle it, I am asking 
you what assurance is there that there is a standard mechanism for 
handling these that can be easily understood by the beneficiary?
	DR. MCCLELLAN.  Well, that is part of our oversight, which I take 
very seriously, that we have independent reviewers available if a 
beneficiary hasn't been able to work out a coverage issue with the plan, 
they can quickly come to us to get appropriate resolution.  It is a very 
important part of our oversight.
	MR. DINGELL.  I will be sending you some, I am sure, because I am 
sure we will shortly be receiving complaints on this matter.
	DR. MCCLELLAN.  Well, please do.
	MR. DINGELL.  Mr. Chairman, I thank you.  I yield back.
	MR. DEAL.  Chairman Barton is recognized for questions.
	CHAIRMAN BARTON.  Thank you, Mr. Chairman.  Thank you, Dr. 
McClellan.  Doctor, how many plans are out there for seniors to choose 
from?
	DR. MCCLELLAN.  It depends on where they live, but in most regions 
of the country, there are between about 11 and 20 organizations that are 
offering prescription drug coverage.  Some of them offer a basic plan 
that is very low cost.  In many parts of the country you can get coverage 
starting at $2 a month and that goes up to a much more comprehensive 
benefit with no donut hole, no deductible, very comprehensive for the 
beneficiaries who want that.
	CHAIRMAN BARTON.  So what would be the least number of plans in 
any part of the country?  In other words, where are there fewer plans?  
And if you know how many that is it would be great.
	DR. MCCLELLAN.  I don't have exact numbers off the top of my 
head, but in Alaska and Hawaii, probably in the range of 30 or so 
choices.
	CHAIRMAN BARTON.  Thirty or so choices in Alaska and that would 
be the fewest?
	DR. MCCLELLAN.  Yes.
	CHAIRMAN BARTON.  And in most of the country there were, I have 
heard, up to 70.  Is that a fair estimate?
	DR. MCCLELLAN.  Probably not that large.  Typically, there would 
be 40 to 50 plan options.
	CHAIRMAN BARTON.  Forty to 50.  Now, to go to Congressman 
Dingell's question about a drug that is not on the formulary.  Why would 
a person with that many plans choose a plan that didn't cover the drugs 
they were taking?
	DR. MCCLELLAN.  Well, one of the options that is available to 
beneficiaries now, which is a really first ever is if they have a specific set 
of drugs that they like that they want to be sure is covered, they can find 
out from us ahead of time not only which plans cover those drugs, but 
how much they can save on those plans and it is much better, I think, 
than just having one national formulary where the vast majority of 
beneficiaries would have no choice but to have to change the drugs that 
they are taking.  You know, they can do that if that is what they want to 
do, but they have got the option--
	CHAIRMAN BARTON.  Is it a fair statement with that many options 
and that many plans that admittedly that it is complicated and it is 
difficult to sift through all these plans?  That is a fair criticism.  But with 
that many choices, there can't be too many people that can't find a plan 
that covers, if not all the drugs, the overwhelming number of drugs that 
they actually take on a routine basis.
	DR. MCCLELLAN.  That is right.  Out of the top drugs used by 
seniors, plans generally cover 70 or 80 or more of the top 100 and there 
are plans available that cover all 100 of them and not only that, people 
can get coverage that fits what they want, no deductible; a flat, 
predictable co-pay, if that is what they want; the kind of coverage they 
want with the drugs that they want.
	CHAIRMAN BARTON.  How long do you think it is going to take to 
get the not just anecdotal stories, but real data about any systemic 
problems?  I mean, it would be a problem if let us say half the seniors 
chose one plan and that one plan didn't cover two of the most routinely 
taken drugs.  That is a problem.
	DR. MCCLELLAN.  We are tracking the complaints that we get about 
plans and those have generally been going down.  We had more in early 
January when, as we have already discussed, there were some data 
problems, and wait time problems, and people had more trouble getting 
their prescriptions filled, but we will keep watching closely.  So far, we 
are seeing millions of our beneficiaries getting coverage for the first 
time, millions more getting much more comprehensive coverage than 
they have ever had from Medicare and so they are getting those 
prescriptions that they want filled on the plan that they chose.
	CHAIRMAN BARTON.  There has been some criticism that these plans 
can drop drugs from the formulary and I think that is a valid criticism.  Is 
it also true that they can add drugs?
	DR. MCCLELLAN.  Yes.
	CHAIRMAN BARTON.  Now, if, in fact, you have a popular plan, that 
there is consistently a drug or two or a half a dozen that people need and 
they are not on it, what does the plan sponsor have to do to get it?  Do 
they have to get permission to put these drugs on the formulary or do 
they just do it?  What is the process?
	DR. MCCLELLAN.  They can just do it and we have seen that happen 
with new drugs that have been approved by the FDA since the 
formularies were first submitted by the plans.  We have seen no cases of 
plans dropping drugs that they initially put on their formularies.
	CHAIRMAN BARTON.  What is the experience, if any, so far in the co-
payment price in the monthly premium that people are paying?  Are 
those going down or going up?
	DR. MCCLELLAN.  Premiums are set.  Those are locked in for the 
year.  The out-of-pocket payments that beneficiaries are making are set 
in many of the plans.  That is why I think a lot of people are choosing 
plans that have a flat co-pay, you know, $3 for a generic drug, $20 for a 
brand name drug.  That is set for the year, as well.  The price changes 
that we have seen have generally only happened on drugs where the price 
for the drug went up across the board, not in Medicare only, but in public 
plans like Medicaid and the VA, as well, and we have not seen any 
disproportionate rises in the Medicare program even in those cases.
	CHAIRMAN BARTON.  And this is my last question because my time 
has expired.  Is there enough data yet to indicate which plan is turning 
out, on a national basis, to be most popular?  Are you seeing a 
preponderance of the seniors gravitate to one particular plan or to one 
group of similar type plans?
	DR. MCCLELLAN.  Well, if you look at the press releases and the like 
from the drug plans, there definitely are some plans that are turning out 
to be more popular than others.  What I can tell you is that seniors are 
generally not choosing the plan that was designed by the Congress, 
despite everyone's best efforts.  They are choosing, instead, plans that 
have no or little deductible, that have flat co-payments that fill in the 
donut hole, that have other features that the plans have designed because 
that is what they thought people would want instead of the standard plan.  
From that standpoint, the market is giving people better benefits at a 
lower cost, a much lower cost than people had expected.
	CHAIRMAN BARTON.  Is that a good thing or a bad thing?
	DR. MCCLELLAN.  I think it is a very good thing, from what the 
many seniors that I have talked to around the country have said.  You are 
right, that it does take some effort to find out about the plans and choose 
a plan that is good for you.  But my experience in talking with seniors, 
which is born out in survey after survey, is that seniors who have been 
through the process overwhelmingly say it was worth the effort, they are 
saving a lot of money, they are getting the kind of coverage that they 
want, they got to choose a plan and we are seeing that happening for 
millions of Medicare beneficiaries for the first time ever.
	CHAIRMAN BARTON.  Thank you, Mr. Chairman.  Thank you, 
Doctor.
	MR. DEAL.  Mr. Waxman is recognized for questions.
	MR. WAXMAN.  Thank you very much, Mr. Chairman.  Dr. 
McClellan, I would like to ask you about a disturbing finding about 
increasing prices under the new Medicare program.  In a report released 
last week by my staff, they compared the prices offered for identical 
drugs by ten Medicare drug plans in December of 2005 and then 
February 2006, and the findings were shocking, even to those of us who 
already had concerns about Medicare plans.  In just the first seven weeks 
of this new Medicare drug program, average prices for ten leading brand 
name drugs increased by 4 percent.  The average price for one drug, the 
stroke medication Plavix, increased by 11 percent.  Are these kinds of 
increases, price increases what you have in mind when you claim that the 
competition among the plans is helping to hold down prices?
	DR. MCCLELLAN.  Absolutely not, Congressman, and that is why we 
went back and looked at the price changes that your staff reported on and 
found that the actual increase, if you look across all the Medicare 
prescription drug plans, matches up with the average increase in AWP, 
that is the price charged for all payers, whether you are Medicare or 
Medicaid or the VA, any program, and many of the plans have had 
smaller increases because they have flat co-pays that don't change at all.  
So we have seen no significant changes other than what has been due to 
the increase in the list prices for the drugs that apply to everyone, 
including the VA programs and other programs.  We are watching this 
very closely.
	MR. WAXMAN.  Well, this a very short period of time to have a 4 
percent increase in the price of these drugs.  We are talking about a 
matter of weeks.
	DR. MCCLELLAN.  Well, it is a result of the timing that you looked 
at.  Around January 1st is when a lot of drug prices historically have 
increased.  These AWP changes occur on a quarterly or annual basis and 
the drugs that have the AWP increases were pretty much the drugs that 
had the increases on January 1st, 2005; January 1st, 2004.  I think the 
good news here for seniors is that they are getting discounts now of 30 
percent to 50 percent off the prices of drugs on average and that they are 
continuing to get those discounts, so if these prices go up, they are still 
getting big savings compared to what they would pay on their own 
and/or in any other program.
	MR. WAXMAN.  Well, with all due respect, I think you are 
illustrating why CMS has a credibility problem because the facts on the 
ground are pretty clear and these facts show the drug prices are going up; 
several analysts have seen it, and as far as the discounts, the first thing I 
want to mention is that the analysis from my staff has shown that the 
drug plans aren't providing big discounts at all.  The prices are way too 
high.  But more importantly, what my latest report shows is that even if 
the plans do provide some kind of discounts, they can raise the prices at 
any time and make these discounts disappear.  That is what seems to be 
happening here.  Plans have raised prices over 4 percent in just a few 
weeks.
	DR. MCCLELLAN.  Again, if you look across not just the ten, you 
know, plans that your staff handpicked, but across all the plans, look at 
the average change in prices.  The average change across all the plans is 
only around 3 percent, which matches up with the numbers in your own 
report for how AWP has gone up, the price changes that you saw that are 
occurring in the VA and Medicaid programs and other government run 
programs, as well.
	MR. WAXMAN.  Well, let us look at that, because there are other 
benchmarks.  The prices offered by the Medicare plans have gone up far 
faster through the other benchmarks such as they have gone up faster 
than the wholesale drug prices, even though you say it is the same as the 
wholesale price drug price increases.  They have gone up faster than drug 
prices in Canada.  They have gone up faster than prices at 
Drugstore.com.  It seems to me that we are finding a big increase and not 
a decrease that we thought was supposed to be the result of this 
competition.  One of the most disturbing things that my report found was 
that the plans that posted the lowest prices in December had the biggest 
price increases in February.  This looks like a classic bait and switch; 
after millions of beneficiaries signed up for the plans, all of a sudden 
price increases by as much as 10 percent in just seven weeks, can you tell 
me what CMS is doing to keep plans from pulling these kinds of bait and 
switch--
	DR. MCCLELLAN.  Well, we have been tracking the prices since this 
program began, since the data started being posted in November.  By the 
way, this is the first time we have had this kind of transparency in 
prescription drug pricing ever and I am glad that your staff is taking 
advantage of some of that information, but we have been watching it 
closely since the beginning of the program.  Again, the increase that we 
have seen, I had a long letter to Consumers Union about this--they had 
some concerns and it is appropriate for everybody to be watching this 
very closely--where we went through in detail the price changes they had 
seen and showed that it was due to two things; one is where the AWP for 
the drug changed, which applies to everyone, whether you are in 
Medicare or in the VA or any other program.
	MR. WAXMAN.  I know that is your argument.
	DR. MCCLELLAN.  And number two, to some specific data problems 
from week to week and what certain plans had submitted.  When the 
plans fix their data, which we monitor closely as well, the price increases 
that you might have thought were there really weren't there.  Nobody is 
paying those price increases at the counter.
	MR. WAXMAN.  I hate to do that, but I do want to interrupt you 
because--
	DR. MCCLELLAN.  You don't need an explanation.  It is your 
prerogative.
	MR. WAXMAN.  I just think if people who have to figure out this 
whole thing, seniors, they look at the myriad co-pays, the premiums, the 
deductibles, and they have no idea what they are really paying for and I 
don't think that we can say competition is working or even can work in 
this kind of atmosphere, but I want, in the few minutes I have left, to ask 
you about these Medicare and Medicaid dual eligibles.  Medicaid has a 
provision that requires via a rebate system, the Federal government 
receives a drug manufacturer's best price on prescription drugs.  
Suddenly they are all being switched over to Medicare and this best price 
rebate is no longer in effect.  The result is a multi-billion dollar giveaway 
to the drug manufacturers.  
	Dr. Steven Sondermeyer, University of Minnesota, estimated drug 
prices for these dual eligibles are now 20 to 30 percent higher than the 
Medicaid program.  My staff has estimated these higher prices will result 
in a windfall of $30 billion for drug manufactures, all of this at 
taxpayers' expense.  Can you explain the rationale for me?  It makes no 
sense that all of a sudden the Federal government is paying billions of 
dollars more for drugs that we were getting at a discount prior to January 
1.  This looks like a multi-billion giveaway to the drug manufacturers.
	DR. MCCLELLAN.  The drug savings from the Medicare prescription 
drug program usually exceed the drug savings available for Medicaid.  
We are seeing that in a couple of ways.  Number one, States that are 
participating in our reimbursement program have differentials made up 
by us because the total cost, the total payments for the drugs by the drug 
plans, are less than what they were paying in Medicaid.  And number 
two, as you saw from our own independent actuaries report, the cost of 
this drug benefit is much lower than projected because they are getting 
savings on average of 27 percent.  That includes substantial rebates that 
are larger than the savings that Medicaid--
	MR. WAXMAN.  I want to dispute that because independent Wall 
Street analysts have estimated that the higher prices, and there are higher 
prices, are going to result in over $1 billion in manufacturer profits in 
just five drugs.  Other industry analysts have estimated the windfall, in 
just the first year, is going to be over $2 billion and more importantly, 
Dr. McClellan, your own data tells a different story.  Just last week CMS 
actuaries estimated that the Medicare drug plans would obtain drugs of 
20 percent off of the manufacturer's listed average wholesale price and 
several months ago, the Congressional Budget Office produced the same 
estimates for the Medicaid program.  They found that the Medicaid 
program receives an average discount that is 25 percent larger than this 
CMS estimate, so I am not sure that you are getting the accurate 
information when you say Medicare prices for brand name drugs are 
even better than the Medicaid best prices.  I would like you to give us 
some more details that back up this--
	DR. MCCLELLAN.  We have a comprehensive report that we are 
releasing that we will share with you that reviews all of this and I'll just 
repeat what our independent actuaries have found.  What they found is 
number one, the costs of this drug benefit are much less than expected 
because of this very aggressive price negotiation and not only that, the 
cost of their forecasting for overall prescription drug spending in the 
United States has gone down significantly, they said because of the drug 
benefit and the aggressive price negotiation.  Second, as the independent 
actuaries have said, any additional government negotiation using the 
Medicaid approach would not lead to lower costs of this program.
	MR. WAXMAN.  Aggressive price negotiation would be if the Federal 
government negotiated for the best price for all the people that are 
getting these drugs.  That is prohibited in the legislation and I do believe 
that we will get the backup for your comments, but I do believe that the 
Medicaid price has always been and continues to be a lot cheaper than 
what we are paying for the same people for the same drugs now that they 
are switched over to Medicare.
	DR. MCCLELLAN.  We do need to make sure our staff goes over our 
results with your staff so hopefully we can get to a consistent answer 
here, but the numbers on the premiums, the numbers on the overall cost 
of the drug benefit, seniors around the country who are getting coverage 
for $20, $10 or even less are seeing the savings right now, made possible 
by the aggressive negotiation that is going on.  I suppose you could 
potentially get more savings if we were more restrictive in what drugs 
people had access to.  For example, the VA, that you cite in your study, 
has prices for--
	MR. WAXMAN.  Medicaid wasn't more restrictive than what they 
are--
	DR. MCCLELLAN.  Oh, Medicaid prices are not lower than ours and 
for the VA, six out of the top ten drugs used by seniors aren't on the 
formulary.
	MR. DEAL.  Dr. Norwood is recognized for questions.
	MR. NORWOOD.  Thank you very much, Mr. Chairman, and if, Dr. 
McClellan, I am going to stay with this subject because I think it is very, 
very important that we all understand this cost picture.  Now, I hear you 
say that patients are going to pay less money for their meds.
	DR. MCCLELLAN.  Right.
	MR. NORWOOD.  Is that a correct statement?
	DR. MCCLELLAN.  That is correct.
	MR. NORWOOD.  Will the taxpayer pay less money for their meds 
than they might under any other circumstances?
	DR. MCCLELLAN.  Well, I hesitate to say under any other 
circumstances.  I can tell you that--
	MR. NORWOOD.  Well, specifically to the circumstance we know 
about, then, which would be Medicaid.
	DR. MCCLELLAN.  Sure.
	MR. NORWOOD.  Say it a different way or say it so this old country 
boy can understand it.
	DR. MCCLELLAN.  Okay, well let me say it again.  Usually the drug 
prices under Medicare, counting for the rebates, are less than the drug 
prices under Medicaid.  We have good first-hand experience on this now.  
You know, we are reimbursing some of the States for the cost that they 
have incurred for some of their dual eligibles during this transition 
period.  The plans are paying them back first, but because in some cases 
the States paid more under Medicaid than the plans are paying for their 
drugs, we are making up that difference.  So that is adding a little bit to 
the cost or implementation of the program.  Another piece of evidence is 
the fact that the cost of this drug benefit is turning out to be more than $5 
billion lower this year alone because of the aggressive price negotiation 
that is going on.
	You asked if it is possible to get more savings.  It might be if we had 
even more, if we had more restrictive drug formularies, if we had more 
restrictive prior authorization, but I don't want to do that.  I think there 
are a lot of beneficiaries who don't want to be in an HMO-type plan 
where, as in the VA system where six out of the top ten drugs aren't even 
covered on the formulary.
	MR. NORWOOD.  Now go there a little bit.  Explain that some more.  
The VA cost of medications we buy, the government, from 
pharmaceutical companies at the Veterans Administration, that whole 
purchase is generally lower, you are saying.
	DR. MCCLELLAN.  They do have lower drug cost, but they have 
some very important differences.  Number one, you cannot get those 
drugs at a retail pharmacy in your community.  You have to go to the 
pharmacies that are within this government-run system; there are not 
very many of those and that is why 75 percent of the drugs prescribed in 
the VA system are done by mail order.  Many seniors don't want to go to 
mail order, they want to use their local retail pharmacist.
	The second difference is that these drugs are prescribed within what 
is essentially an HMO-type of coverage arrangement.  They are salaried 
doctors that work for the government in only a limited number of 
facilities that prescribe the drugs and they work within the VA system.  
Many seniors don't want to get their care through an HMO-type of 
arrangement.
	A third difference is in how the formularies work.  Under the 
Medicare program we have had fairly broad requirements about access to 
medicine, so 80 or more out of the top hundred drugs are typically 
covered by a plan.  The numbers in the VA are significantly less.  Six out 
of the top ten drugs are not covered, for example.
	MR. NORWOOD.  So Mr. Waxman, his view of it is that the 
pharmaceutical industry is getting this windfall.  Your view of it is that 
we are actually offering a darn good drug plan.  For seniors it is costing 
more.
	DR. MCCLELLAN.  And I like to go by the numbers and one source 
of numbers is our independent actuaries and what they said in their 
forecast about national health expenditures which they just made 
recently.  Just a week ago, they said that their expectations about total 
prescription drug spending in this country are now much lower in the 
years ahead because of the very aggressive price negotiation and cost 
control steps going on in this program, so you have got millions more 
seniors getting drugs at a much lower cost, you have got total drug 
spending going down.  Those seem like pretty good steps.
	MR. NORWOOD.  Well, we need to make sure everybody understands 
this as you gather more and more information.  My last minute I have 
left, make me feel good about what you are going to do to police the 
insurance plans.  Just make me feel better.
	DR. MCCLELLAN.  Well, this has come up a lot and I want to be very 
clear that we take our oversight responsibilities very seriously.  We have 
already implemented a program where we are monitoring the wait times 
on the plans' call lines for beneficiaries, for pharmacists, and we are 
going to do it for--
	MR. NORWOOD.  Are they improving their wait call times?
	DR. MCCLELLAN.  They have improved significantly.  They were 
very long in the early part of January with the data problems.  They have 
gotten significantly better.  I think there is still room for more progress.  
We are also tracking complaints that come in about individual plans.  
What we are focusing on right now is fixing each individual complaint as 
it arises, but over time, we are going to be able to see patterns and where 
we see patterns in plans, plans that are doing a relatively bad job, we 
have got further enforcement actions that we can take that go all the way 
up to suspending them from the Medicare program.
	MR. NORWOOD.  How long does it take to get patterns?  Five years, 
ten years?
	DR. MCCLELLAN.  We are going to have reports from the plans over 
the next several months.  We expect that that information will be 
available within just a few months.
	MR. NORWOOD.  Thank you, Mr. Chairman.
	MR. DEAL.  Ms. Baldwin is recognized for questions.
	MS. BALDWIN.  Thank you, Mr. Chairman.  Some States waded into 
the territory of drug benefits prior to the passage of the MMA.  
Wisconsin was one of those States, that under a pharmacy plus waiver 
initiated a prescription drug plan called Senior Care.  The program has 
been enormously popular, cost effective, and I would argue very 
successful.  Upon passage of the MMA, we were very concerned that 
Wisconsin might be forced to end Senior Care.  I am wondering how it 
would interact with the new Part D program and I was very pleased that 
the waiver was extended to the year 2007 and I thank you for your efforts 
in that regard and that in addition, Senior Care was considered creditable 
under Part D.
	During the enrollment period for Part D we experienced, in 
Wisconsin, a substantial increase in enrollment in Senior Care.  It seems 
to be one of the preferred plans, 6,000 new enrollees over the past 
several months.  And what we are finding in terms of our own analysis is 
that almost all who qualify for Senior Care in the State of Wisconsin, for 
them the benefit is more generous and at a lower cost, so it is very cost 
effective for the citizen.
	The most frequent request that I get from my constituents, in talking 
about all this is please make sure they, that would be you, let us keep 
Senior Care into the future and I know that the waiver review process 
looks at a wide range of factors, but my constituents have asked me and 
frankly, the entire Wisconsin delegation to fight for Senior Care.  So I 
am asking first off, what assurances can you give me that Wisconsin's 
seniors, or give me and Wisconsin's seniors that Senior Care will 
continue beyond the year 2007 and also, how much weight do you place 
on issues like customer satisfaction and cost effectiveness in your waiver 
review?
	DR. MCCLELLAN.  Well, Congresswoman, first I hope our 
commitment to Wisconsin's seniors has been evident already from the 
fact that we developed the Pharmacy Plus waiver program and approved 
the Senior Care program in the first place.  Secretary Leavitt worked 
very closely with Governor Doyle and with the rest of the delegation.  
You are absolutely right.  There is a strong commitment from the 
Wisconsin delegation to make that program work.
	MS. BALDWIN.  Everyone sees that 2007 date out there in the future, 
so there is so much anxiety.
	DR. MCCLELLAN.  Well, Congressman Ryan and Congressman 
Green, they all have been working very closely with us to make sure that 
we keep this program and the people it serves, served effectively.  The 
arrangement that Governor Doyle worked out with Secretary Leavitt 
involved not only continuing the program in this year in its current form, 
but also making available a wraparound version, much like the State of 
Illinois has done, or other States with Pharmacy Plus waivers have done, 
to have it work even more smoothly with the Medicare prescription drug 
benefit and we are pleased that that program is continuing now.  I am 
glad that more people have enrolled in it.  There was a big gap, as you 
know.  	That program had been around for a couple of years and only 50 
percent or fewer of those who were eligible signed up for it, so I am glad 
that we are getting more people enrolled.  In the same period of time we 
have seen 80,000 people sign up for the Medicare prescription drug plan, 
so we also want to make sure that the Senior Care works well directly 
with the Medicare prescription drug plan.  So we are going to keep up 
this close relationship with the Governor and the State to make sure this 
happens going forward.
	MS. BALDWIN.  Well, I know in terms of that negotiation, I guess the 
real question is the degree to which this is an incredibly cost-effective 
and popular program; creating new demands on it is something that you 
just mentioned and discussed, but to what degree is the current success of 
the program weighed in the request for an extension beyond 2007 
because, you know, just as it is, it is cost-effective, wildly popular for 
those who qualify and I would absolutely agree that they set up and 
structure the program in a way that not everybody who is 65 and older 
qualifies for it, but for those enrolled, it is, you know, again, the benefit 
is more generous and at a lower cost to the Federal government.
	DR. MCCLELLAN.  It is.  It has taken, by the way, some time for 
those enrollment numbers to get up.  Starting in 2002 and you know, as 
we are talking about getting more enrollment in the Medicare program, 
also a voluntary program, I am pleased that we are kind of running ahead 
of the numbers that Senior Care was able to get in its first couple of years 
and that we are adding more onto Senior Care now as more people are 
getting coverage through the Medicare drug plans, but we will keep 
working together closely just as we have done in Illinois.  Illinois had a 
Pharmacy Plus waiver, too, where it is now wrapping around the benefit, 
saving the State money, working--
	MS. BALDWIN.  Let me just interject because my time has ended.  I 
do have a follow-up question I will submit in writing about those 2,000 
plus Senior Care beneficiaries who were auto-enrolled mistakenly in 
another Plan D program.
	DR. MCCLELLAN.  Absolutely.
	MS. BALDWIN.  We do want some follow-up on that, thank you.
	MR. DEAL.  I thank the gentlelady.  Dr. Burgess is recognized.
	MR. BURGESS.  Thank you, Mr. Chairman, and again, Dr. 
McClellan, thank you for your forbearance.  If it is all right with you, I 
am going to take a few questions from the testimony of my constituent, 
Mr. Song, who is going to be heard from later, but this is perhaps an 
opportunity for him to get his questions answered more quickly.
	DR. MCCLELLAN.  Sure.
	MR. BURGESS.  One of the issues he brings up is why has there been 
no prompt pay provision within the Medicare plans and why can't there 
be an electronic fund transfer so the pharmacies don't have this 
extremely long time in their accounts receivable?
	DR. MCCLELLAN.  Good question.  I am concerned about long waits, 
particularly if they are waits that weren't contemplated in the contract the 
pharmacy has with the drug plan.  Many plans are paying using 
electronic funds transfers.  Some are paying by check.  I understand that 
that is not unusual in the industry.  Many drug plans, or many health 
insurance plans, pay by check.  What we have the authority to do is to 
make sure that the drug plans follow their contractual provisions.  I want 
to be very clear about this.  If a pharmacist is not getting paid according 
to the contracts, if they are facing undue delays in reaching the plan, we 
want to hear about it and we will take further action.  We have done that 
already.  That has brought the wait times way down, and we are seeing 
checks going out on a regular basis, payments going out on a regular 
basis, so we do want to make sure that those contracts are enforced.
	MR. BURGESS.  We might consider making electronic fund transfer 
just part of any plan that we accept in the future and encouraging those 
plans to go on that.  What about the issue of drug plans being able to put 
a logo on their card?
	DR. MCCLELLAN.  This is what is called co-branding and we asked 
for a comment about this going into 2006 and got some comments back, 
but just like a lot of issues with a new plan that people haven't 
experienced before, I think the experience since then has led people to 
change their views and so I think some of the comments that we got in 
2005 would be different than they are in 2006.  Looking ahead, we have 
put out for comment what we should do with this co-branding approach 
in the future.  That is out for public comment right now.  I am sure we 
will hear back from pharmacy groups on this; I already have and I am 
sure we will be taking account of those comments as we go forward.  We 
have already worked with many of the drug plans to have them make 
clear that if they do put any logos on their cards, they also communicate 
that other pharmacies are in their network and can be used and we are 
looking at whether further steps should be taken and that is out for public 
comment right now.
	MR. BURGESS.  Very well.  What about standardization of dealing 
with formulary denials?  Apparently, right now you just get the message 
back that a drug is not covered; the pharmacist, perhaps a physician's 
office has to get involved to find out why the drug hasn't been covered.  
Is there any way to standardize that process so that there can be an 
immediate communication of why the drug wasn't covered and the 
pharmacist will understand that and know how to remedy the problem?
	DR. MCCLELLAN.  You know, I have heard from many pharmacists 
about this.  It reminds me of my own experience in medical practice 
where, as you know, different insurers require different forms.  There 
just is extra work for the health professional.  There is a group working 
right now, with our backing, made up of representatives from 
independent pharmacies, chain pharmacies, and the drug plans to 
accomplish just that kind of standardization and they have already made 
some real progress.  They submitted some new code standardization 
ideas to, what is called the NCPDP, that is the standard setting body for 
pharmacy transactions.  They have already submitted some ideas.  I 
expect them to do more just in the next few weeks to help make further 
progress on this issue.  It is a very good idea.
	MR. BURGESS.  Do you think that would streamline the process?
	DR. MCCLELLAN.  I do.  I think that is going to help make this work 
better, but I have got to tell you,  I don't want us to just come in and put 
out what we think are the right standards.  I would rather have the 
standards come from leadership from the pharmacies working with the 
plans on both what is feasible and what is going to be most effective 
from the pharmacies.
	MR. BURGESS.  And I assume you will hear from the community 
pharmacists in that regard, if you haven't already?
	DR. MCCLELLAN.  Absolutely.
	MR. BURGESS.  Okay.  What about the enrollment period where a 
patient signs up for a plan on February 28th and March 1st walks in, 
presents their card, said I need my stuff?  Apparently, that is happening.  
Is there any way to make it a reasonable enrollment period?
	DR. MCCLELLAN.  Well, the pharmacies have borne the brunt of that 
short turnaround.  That basic feature is in the statute.  We are looking at 
what we can do to change that going forward, but that is an area where 
we may need to keep talking with you.  There have been some ideas 
from the plans from us about in the future having more of a delay period 
between when a person enrolls and when that enrollment becomes 
effective, so that is an issue that we are going to see if we can address.  It 
is very hard to address in the extreme short term because it requires 
systems changes and also there are these potential statutory obstacles in 
the way.
	What we have done, instead, in the short term, is engage in a broad 
education and outreach campaign through our own web site and 1-800-
MEDICARE number, through working with all the drug plans and 
through pharmacies and advocacy groups to let people know that signing 
up early in the month provides plenty of time for them to get their card 
and have the systems work well when they start using their prescription 
drug coverage early the next month, or at least to wait a few weeks.  You 
know, if you can sign up on your own, if you get your application in, 
wait a week or so, you will get a letter back from your plan that gives 
you proof of the insurance; wait a few weeks, you will get a drug card.  If 
you can sign up that far ahead, you have a very high likelihood of having 
a good, smooth experience the first time you go in to the pharmacy, so 
we are very much stressing those educational messages right now.
	MR. BURGESS.  Yes.  You know that doesn't always work out.  Mr. 
Chairman, could I ask that we consider having a repeat of this hearing 
the first week in May so we can revisit the concept of the May 15th 
deadline?
	MR. DEAL.  I can't make a promise about an exact date for a hearing, 
but we will certainly consider it.  I think there has been a request from 
both sides to do that.
	DR. MCCLELLAN.  And I will look forward to seeing you again.
	MR. DEAL.  The gentleman's time is expired.  Mr. Pallone.
	MR. PALLONE.  Thank you, Mr. Chairman.  I am going to try to get 
some quick answers from you if I can because I have a bunch of 
questions.  First of all, following up on what was just said about the 
prompt payment and the co-branding, because this was a big issue when 
I went to visit my pharmacies.  Let me just ask you, would you be in 
favor of legislation that would require, for example, two weeks prompt 
payment for electronic or say, 30 days for, you know, written by check, 
and also, on the co-payment, I mean, co-branding?  We could simply 
prohibit co-branding and have penalties for it.  What would you think of 
legislation--
	DR. MCCLELLAN.  Well, on the first issue, on the timing of payment, 
that is something that would require legislation.  Under the program, the 
pharmacies contract with the drug--
	MR. PALLONE.  Right, but let us assume that I put in the bill, I will 
gladly do it, let us say 15 days for electronic, 30 days for written and 
prohibit co-branding.
	DR. MCCLELLAN.  One concern is that some plans are paying on a 
faster schedule than that.  Some of them are doing 10-day--
	MR. PALLONE.  No, I mean at a minimum.
	DR. MCCLELLAN.  Well, I am concerned about us putting restrictions 
on contracts that may work better.
	MR. PALLONE.  Well, you are not necessarily in favor of it, then?
	DR. MCCLELLAN.  Right.  On co-branding--
	MR. PALLONE.  Co-branding.
	DR. MCCLELLAN.  --we are, for the 2007 year, for the next round, 
when people are going to have cards printed up and so forth, we have 
asked for public comment on whether and how we should change--
	MR. PALLONE.  But you are not in favor of prohibiting it at this 
point?
	DR. MCCLELLAN.  I am not--I don't think we need legislation.  I 
think we can get input from the pharmacy groups.
	MR. PALLONE.  Can you do it without legislation?
	DR. MCCLELLAN.  Yes, and based on that input we will put out 
further guidance on what should be--
	MR. PALLONE.  All right.  I want to go back to some of the questions 
that Mr. Dingell asked you for because I have to be honest with you, this 
whole issue with the prior authorization and appeals of formularies, I 
think this is going to get worse.  I mean, the transition period, I guess, 
ends sometime this month and I just think the mass confusion that we 
have now, which is out there.  I mean, I am not reading it in the 
newspaper, I am getting it from my constituents, is only going to get 
worse and if we don't have some way to, you know, standardize appeals 
of formularies or deal with this prior authorization, I think it is only 
going to get worse, so I mean, there was an article in the New York 
Times that said one plan had 39 different forms to use for prior 
authorization.  Do you have any plans to require a standard form for 
appeals to minimize this kind of confusion?
	DR. MCCLELLAN.  Well, I don't want to sound technical, but the 
process that the plans go through is asking for an exception.  If that 
process doesn't get worked out smoothly between the beneficiary and the 
plan, they can appeal to Medicare and Medicare does have--
	MR. PALLONE.  But the problem is that people don't even know 
about this, Doctor.  They don't even know.
	DR. MCCLELLAN.  Well, they do.  Well, there are lots of places they 
can get that information, including from the information the plan sends 
them.
	MR. PALLONE.  Yes, but the drug plans are not adequately notifying 
them, believe me.
	DR. MCCLELLAN.  Let me turn to what we have done to make this--
	MR. PALLONE.  Yes, but I just want to ask you this because I have 
got to ask you a couple more things.  You don't have any plans to require 
a standard form of appeal right now?
	DR. MCCLELLAN.  We have a model form for exceptions and we are 
working right now with plans, pharmacies and physician groups to get an 
effective standardized form widely adopted and that is something we will 
be looking at and grading the plans on.
	MR. PALLONE.  But it is not required at this point?
	DR. MCCLELLAN.  Well, it hasn't been widely adopted at this point 
because this is a new program.
	MR. PALLONE.  Okay.
	DR. MCCLELLAN.  And we are working with all of these parties--
	MR. PALLONE.  But it is not required?  Just yes or no, it is not 
required?
	DR. MCCLELLAN.  It is not required at this point.
	MR. PALLONE.  Okay.
	DR. MCCLELLAN.  But many plans are using the model form.
	MR. PALLONE.  All right, let me give you--I have only got about a 
minute and a half.  Can CMS provide us some data on the Part D 
exceptions and appeals?  In other words, can we get the number of 
requests for exceptions and appeals under Part D that have been filed, the 
types of exceptions and appeals filed, the disposition of those requests?  I 
have got a whole series of questions.
	DR. MCCLELLAN.  The plans are required to provide that 
information as part of the--
	MR. PALLONE.  But have you collected that data so far?
	DR. MCCLELLAN.  They will be submitting it to us on a quarterly 
basis and after it has come into us and we clean it up, we will make it 
available.
	MR. PALLONE.  Mr. Chairman, if I could just, with your permission, 
ask some written questions about that data and whether it could be made 
available?
	DR. MCCLELLAN.  We would be happy to answer your written 
questions.
	MR. DEAL.  Without objection.
	MR. PALLONE.  All right.  Then the last thing.  I have to ask you 
about New Jersey because, you know, in our State, we are putting out so 
much money and everybody is so concerned because when Governor 
Corzine and his staff met with you, I guess, within the last week, you 
were unequivocal stating that New Jersey would be made whole in terms 
of both dual eligibles as well as our PAAD program, which is our own 
New Jersey program, but today we are told that with some of the 
Governor's staff and with the New Jersey Medicare people, the agency 
backed away from some of those statements, so I am concerned about 
where we are going and I just wanted to, again, with the Chairman's 
permission, if I could give you some written questions about how New 
Jersey is going to be reimbursed and whether or not that original 
commitment is going to be met or if there is some change.
	DR. MCCLELLAN.  Well, we have been working very closely with 
the State.  As you know, the reason why New Jersey has got so many 
more claims than just about every other State is that most of those are not 
dual eligible beneficiaries.  Those beneficiaries are now in their 
Medicare plans, are getting--
	MR. PALLONE.  But the impression given, based on the conversation 
you had with the Governor in the last few days was that the other people 
who are under our State plan that are not dual eligibles, that we would 
also be reimbursed for that.
	DR. MCCLELLAN.  We have, as part of the reimbursement program, 
a standard template for paying for, for making sure States are reimbursed 
for their dual eligible beneficiaries and for low-income beneficiaries.  
New Jersey has some beneficiaries who aren't in either of those 
categories.  For the ones that are enrolled in Medicare drug plans, some 
of them aren't even enrolled in Medicare drug plans yet, so there is no 
way we can pay for them.  For the ones that are enrolled, we are going to 
try and work with the States, with the State of New Jersey to get those 
resolved, too, but that is kind of a unique issue for the State of New 
Jersey.  It is not something--
	MR. PALLONE.  With the Chairman's permission, if I could just ask 
some questions to follow-up on this?
	MR. DEAL.  The gentleman may submit his questions in writing.  I 
am going to ask the members if they would try to abide by the time 
clock.  We have got some members on the second panel that are going to 
have to leave and we are not even going to get to their testimony if we 
don't speed this process up just a little bit.
	MR. PALLONE.  Thank you.
	MR. DEAL.  Mr. Ferguson.
	MR. FERGUSON.  Thank you, Mr. Chairman.  Thank you, Dr. 
McClellan, for being here and thanks for your patience and your helping 
to wade through so many of these issues and a lot of general questions 
have been asked.  I want to hone in on a more specific issue, not the 
implementation, generally, but an issue that I think, my understanding is, 
could have easily been resolved.  It would not have resulted in any 
administrative or budgetary burdens.  It is a critical healthcare issue to 
thousands and thousands of seniors who rely on medication, prescription 
medication to raise their good cholesterol in an effort to prevent heart 
disease.  I just had my physical.  My good cholesterol is okay, but it 
might not be for the rest of my life, so it is something that obviously all 
of us need to be focused on.
	The issue concerns reports that CMS is now informing plans that 
Part D will not cover Niaspan, which is an important prescription drug.  
It was approved by the FDA specifically to reduce the risk of recurrent 
heart attacks and to treat dislipodemia.  I have a couple of questions and 
a couple of assumptions that I want to ask if you could confirm this.  A 
lot of cardiologists have contacted our office, as well as folks from your 
operation, your Deputy Director of Plan Policy and Operations, Gary 
Bailey; your Chief Medical Officer, Dr. Kellman; they have 
acknowledged that Niaspan has an important place in the treatment of 
dislipodemia.  Do you agree with the assessment that Niaspan is a 
valuable medication to patients?
	DR. MCCLELLAN.  It is.  As you said, that is on the FDA label.  What 
is also on the FDA labeling is that it is a vitamin, which means that it is 
in one of those categories that is excluded.
	MR. FERGUSON.  I am going to get to that.
	DR. MCCLELLAN.  Okay.
	MR. FERGUSON.  Isn't it, in fact, the most effective treatment for 
treating, for raising HDL?
	DR. MCCLELLAN.  Well, there are many effective treatments for 
dislipodemia and niacin is, a very effective way to raise HDL for patients 
who can tolerate the side effects.
	MR. FERGUSON.  What other ways can patients reach their HDL 
goals without--
	DR. MCCLELLAN.  Dietary change, some of the other medications 
that are available, non-vitamin medications that are available by 
prescription.
	MR. FERGUSON.  But for probably literally thousands and thousands 
of seniors, this is the best way, would you agree?
	DR. MCCLELLAN.  This is definitely a treatment that is widely used 
by seniors and is very effective in raising HDL.
	MR. FERGUSON.  Okay.  Well, the vast majority of the plan 
formularies that were initially approved by CMS covered it and now, you 
know, when seniors were deciding which plan to choose, the information 
available to them on the CMS formulary finder indicated that this was 
covered on many of the plan options and it wouldn't have been 
surprising to patients and their physicians, since it is already covered by 
most private insurance plans.  All 50 State Medicaid plans cover it.
	It has appeared on the formularies for numerous Medicare discount 
drug cards and recently, on the web site, your web site, you said that this 
is considered now a prescription vitamin, which is excluded because of 
its technicality, from definition, for Part D's definition of a drug.  This is 
a prescription drug.  You can't just go in and buy it off the shelf.  You 
need a prescription from your doctor to buy this product.  It is a 
prescription medication.  And now the decision, starting June 1 of this 
year, that you are actually going to pull coverage; people who currently 
have coverage for this under Part D are not going to have their coverage 
for this pulled.  Is this the final word on this from CMS?
	DR. MCCLELLAN.  Let me clarify that last point.  This is a 
prescription vitamin and unfortunately, no matter how many times I ask 
them, our general counsel gives me the same answer every time, which is 
that the law specifically does not allow Medicare to pay for prescription-
-
	MR. FERGUSON.  But it is paying for it now.
	DR. MCCLELLAN.  And that is why there has been this further 
clarification.  The plans are not required to drop this from their coverage.  
In fact, many plans cover a number of drugs that are excluded; they just 
don't get any subsidies from Medicare in doing so.  They can provide 
discounts, as they did under the discount card.  In some cases, they can 
even provide some coverage, but it has got to be built into the cost of the 
benefit that they are providing, itself.  It is not something that we are 
allowed, under the law, to provide Medicare subsidies to pay for.
	MR. FERGUSON.  The American Heart Association, the American 
College of Cardiologists, and American Pharmacists Association have 
issued alerts warning of very serious health consequences for people if 
they don't have coverage for this drug.  You are aware of that?
	DR. MCCLELLAN.  Well, many people didn't have coverage for this 
or any other drug before and thanks to the new drug benefit, they have 
got it now and they are getting a lot more savings on their other drugs.  
That is why seniors, with that $1,100 in average savings are going to be 
in a lot better shape to get any drug that they need, including drugs that 
are excluded from the Medicare program right now, but this is a statutory 
issue.
	MR. FERGUSON.  So there is, what you are suggesting is there is 
absolutely no administrative action that CMS can take to solve this 
problem?
	DR. MCCLELLAN.  I will ask our lawyers again, because I have had a 
lot of these conversations already, and I would be delighted to continue 
to work with you and your staff to see if we can find a way to resolve 
this, but from the FDA labeling, it is very clearly a prescription vitamin.  
From the statute, vitamins are very clearly excluded from what 
Medicare--
	[The information follows:]

INSERT FOR THE RECORD OF THE HON. MARK MCCLELLAN, ADMINISTRATOR, CENTERS FOR 
MEDICARE & MEDICAID SERVICES

        CMS has issued more recent policy clarification regarding prescription 
Niacin products.  This policy clarification supersedes our February 3, 2006 
letter.  
        The Food and Drug Administration has determined Niaspan and Niacor to 
be safe and effective drugs, used therapeutically for the treatment of 
dyslipidemia, and that they do not serve as nutritional supplements or address 
vitamin deficiency.  Additionally, these products are used at dosages much 
higher than appropriate for nutritional supplementation.  For these reasons, 
CMS has superseded its initial February 3, 2006 letter and determined that 
these products should not be considered prescription vitamins for purposes of 
Part D coverage.  The new policy guidance does not require plans to add 
these products to their formularies for 2006.  However, for the 2007 contract 
year, prescription Niacin products should be considered for formulary 
inclusion similar to all other Part D drugs.

	MR. FERGUSON.  But it is not Vitamin C that I can go buy off the 
shelf.
	DR. MCCLELLAN.  I know.
	MR. FERGUSON.  You need your doctor to tell you that you need this.
	DR. MCCLELLAN.  Unfortunately, the statute says vitamin and it 
doesn't make a distinction between Vitamin C and niacin.
	MR. FERGUSON.  Well, it is a very unfortunate technicality for folks 
who rely on this for their HDL.  Mr. Chairman, I am wrapping up and I 
know I am done.
	MR. DEAL.  The gentleman's time has expired.
	MR. FERGUSON.  I appreciate the great work you have done on the 
implementation of this program.  I know this is a vexing issue, but I think 
it is a hugely important issue to seniors who need this for raising their--
	DR. MCCLELLAN.  And I want to be clear that the plans can offer 
discounts on niacin that people didn't get before.  They are offering 
discounts on all medications.  In many cases they can provide benefits in 
this area.  We just can't provide a Medicare subsidy for it.
	MR. FERGUSON.  I would appreciate your looking into it again.
	DR. MCCLELLAN.  Okay.
	MR. DEAL.  Ms. Eshoo, you are recognized.
	MS. ESHOO.  Thank you, Mr. Chairman.  And again, I want to urge 
you to hold more oversight hearings on this, on a whole variety of issues.  
I think that that has come across from both sides of the aisle and I think 
that we owe it to the people that we represent to do so.  Dr. McClellan, I 
have several questions.  First, how much do you owe the States now on 
dual eligibles?
	DR. MCCLELLAN.  We have not gotten claims from all of the States.
	MS. ESHOO.  How much do you owe from those that have put in 
their claims?
	DR. MCCLELLAN.  Oh, in many States it is a very low number.  
Florida, less than 100; Pennsylvania, less than 5,000 claims so, you 
know, a very small amount of dollars.
	MS. ESHOO.  It is much larger in California that I know of, in terms 
of what is being reported.
	DR. MCCLELLAN.  Yes, that is right and--
	MS. ESHOO.  Do you have enough money in your budget, are you 
forecast, did the forecast--
	DR. MCCLELLAN.  We do, because most of these costs are not going 
to be additional costs.  We are going to reconcile the payments with the 
drug plans.  These are payments that the drug plans should've been 
making.
	MS. ESHOO.  Okay.
	DR. MCCLELLAN.  And so the drug plan has been very clear.
	MS. ESHOO.  All right, on to the next question.  How many people 
have actually electively signed up for Part D?
	DR. MCCLELLAN.  Completely on their own.
	MS. ESHOO.  Elected, elected.
	DR. MCCLELLAN.  Over 5.5 million.  There were another more than 
five million who elected to join a Medicare Advantage plan, including 
many people in your fine district who are now getting more prescription 
drug coverage, so millions of people have signed up for plans that 
include this--
	MS. ESHOO.  Well, they are not the numbers that have been put out, 
generally, in the press.  That is why I am asking that because there is a 
difference between 25 million and 5.5 and I don't think that is nitpicking, 
but I just wanted to hear what you have to say about it.  I should have 
started out with this observation and I am going to say it.  I know that I 
am inside the beltway.  I have to tell you, I have been here from the very 
beginning of this hearing and our discussion here and what is going on 
outside of this place are two completely different things, two completely 
different things.  And if anyone thinks that we are even in the ballpark on 
this, I mean, what it says to me more than anything else is that Congress 
is not listening.
	I mean, there are huge problems out there with people and that is 
really quite stunning.  I have to say that, and I say that, having sat 
through this.  This is an almost out-of-body experience today.  I don't 
wish anyone any ill or harm or anything.  I wish that this was something 
that was really working well and that we had to work through some 
wrinkles, because it is large and it is new, but that we would bring people 
along.  That seems to be the notion that we are operating under here, but 
I want to say to Members and to you, Dr. McClellan, that is not what is 
going on outside of here.  It is a completely different thing.  People are 
really up in arms about it, so you know, I hope we have a reality check.  
Maybe that is what oversight can do, but if we are going to pretend that 
we have just got a few things to iron out here, we are really going to miss 
the mark with the American people and so on the issue of that enrollment 
deadline, I know that Mr. Bilirakis raised it, and said that he would like 
to work with you on that.  I want to sign on to that.
	I think that that enrollment deadline really needs to be stretched and 
I think, in many ways, it goes to the heart of one of the larger problems 
that people are experiencing, just generally, with the whole plan and they 
shouldn't be penalized for that.  It is Congress that designed the darn 
thing, you know, and if, in fact--this is not insinuating that people aren't 
sharp enough or good enough or intelligent enough--they really are 
having problems with it and I don't think it is fair if they are penalized.  
And the penalty accrues, as well, as I understand it, so would you support 
that?  Did you say that you supported--
	DR. MCCLELLAN.  I said I absolutely want to keep talking with you 
about this issue.  What, I guess, we are most focused on right now is that 
we have seen millions of people find out from--
	MS. ESHOO.  Well, Dr. McClellan--
	DR. MCCLELLAN.  --their plan and we want to make sure that 
everyone will take advantage of it as soon as possible.
	MS. ESHOO.  I really--just a second.  Just a second.  How many 
Medicare beneficiaries are there in the country?
	DR. MCCLELLAN.  Altogether, over 40 million.
	MS. ESHOO.  All right.  So now, we have had 5.5 million that have 
elected to sign up, so now if you want a robust program, you believe in 
it, you are administering it, all right?
	DR. MCCLELLAN.  Right.
	MS. ESHOO.  Might I suggest to you that we have got a ways to go?  
So you know what?  If you penalize people, you are chasing them away 
from what you are advocating, so I would urge you to think this one 
through and all I can do is to suggest that.  Secretary Leavitt has 
indicated--
	MR. DEAL.  The gentlelady--
	MS. ESHOO.  If I might just finish this one?
	MR. DEAL.  Okay.
	MS. ESHOO.  That many of the insurers will drop or some insurers, 
he said many, insurers will drop out of the Medicaid program, the 
Medicare program next year.  Is there a plan on how to handle the 
beneficiaries who would no longer have coverage because their carrier 
pulled out?
	DR. MCCLELLAN.  Yes, there is.
	MS. ESHOO.  And is there a grace period?
	DR. MCCLELLAN.  Well, remember that a lot, what I think Secretary 
Leavitt was talking about is competition working.  Not every one of 
these plans, and Chairman Barton mentioned this, as well; not every one 
of these plans is equally popular.  Many plans have seen a large number--
	MS. ESHOO.  Yes, we have 132 in California.
	DR. MCCLELLAN.  Some were offered that not many people are 
signing up for.
	MS. ESHOO.  Will there be a grace period or something for people?
	DR. MCCLELLAN.  Absolutely, and if the plans continue through the 
end of the year, as you know, there is another opportunity for people to 
choose a plan, maybe a better plan at the end of this year.  At that point, 
we will have a lot more information about which ones have done well 
and which ones have done badly, and probably a lot of people are going 
to want to switch plans then, anyway.  We will be working to make sure 
that everyone knows if their plan is not going to be around.
	MS. ESHOO.  As long as they are taken care of, that is what I want to 
know.
	DR. MCCLELLAN.  They will have an opportunity--
	MS. ESHOO.  I am still waiting to hear back from you on the 
geographic reimbursement adjustment last Thanksgiving.
	[The information follows:]

INSERT FOR THE RECORD OF THE HON. MARK MCCLELLAN, ADMINISTRATOR, CENTERS FOR 
MEDICARE & MEDICAID SERVICES

        In the proposed physician payment rule for 2005, CMS proposed 
modifications to the California GPCIs.  This proposal was based on a budget-
neutral adjustment to GPCIs within the state.  The California Medical 
Association rejected that proposal because it did not provide for new money, 
which CMS does not hae the authority to provide.  The Association also sent a 
letter to CMS at that point stating that their prefered resolution was a 
legislative change.  CMS' approach to intra-state GPCI adjustments has been to 
obtain consensus from the members of the state medical association and then 
implement changes based on that consensus.  The California Medical Association 
was not able to achieve consensus on a budget-neutral plan for adjusting their 
state's GPCIs and CMS is reluctant to make changes which would take money out 
of several counties in the state to the benefit of other counties, if the 
members of the California Medical Association have not been able to achieve 
consensus on that matter.  At this point, we understand that the CMA intends 
to pursue a legislative fix, rather than attempt to obtain consensus on a 
budget-neutral adjustment.

	MR. DEAL.  Mr. Allen, you are recognized for questions.
	MR. ALLEN.  Thank you, Mr. Chairman.  Dr. McClellan, I do have a 
bit of Congresswoman Eshoo's feeling that this is disconnected in too 
many ways from what we are hearing back home.  Just to give you one 
example, you said that not one plan had removed a drug from its 
formulary.  We started to get calls on January 20th or 21st, complaints 
from people who had signed up for a plan because of a certain drug and 
the drug had been removed from the formulary.  I am just telling you, 
that is part of what we have been hearing, so the plans may not have been 
going through the process, but you know, we are getting those kinds of 
calls.
	DR. MCCLELLAN.  If you don't mind just quickly, on this point.  
This may be that Niaspan issue that we were discussing earlier where we 
had to direct plans that we could not provide financial support for, but 
that they are able to continue offering it for a while.
	MR. ALLEN.  Maybe.  A couple of other things I just wanted to 
mention.  One is your comments about the VA struck me as being a little 
bit off base.  I mean, my understanding, correct me if I am wrong, the 
VA patients have access to all the drugs that are approved by the FDA 
and there are some popular drugs for which the VA gets a particularly 
good price and those are preferred, but if a doctor wants to or the patient 
needs the drug, they can get any drug and that that system is really the 
same kind of tiered system that Medicare uses.  Am I wrong?
	DR. MCCLELLAN.  The VA does have a national formulary and you 
can get an off-formulary drug if you go through the exceptions and 
appeals process, and that is similar to the way the Medicare program 
works.  What is different is that the Medicare drug plans generally have 
broader formularies than the VA.  Six out of the top ten drugs aren't on 
the VA formulary; Medicare plans, in contrast, cover 80 out of the top 
hundred and we could have tighter formularies and some plans do.  We 
don't require that because many beneficiaries--
	MR. ALLEN.  Right.  Okay, thank you.  I take the point.  As long as 
we are clear on the difference.  You will forgive us, I think, if we have 
some skepticism about estimates about cost because the history of this 
legislation is one that doesn't provide confidence in the numbers that are 
presented on cost and I can't go through all that with you now, but every 
time I hear words like the total cost is going to be less than Medicaid, I 
start backing off and wondering how that is going to be calculated.  The 
cost of the entire program, the single thing that is going to determine, as 
we go forward over the next year or two, the single component of cost 
that may be the major drive here is not about negotiation, it is how many 
people sign up for the plan and if people don't sign up for this, for the 
Medicare Part D plan, the cost will be lower than projected, but fewer 
people than expected will be getting their drugs, so the question of how 
we evaluate cost, I think, is important.
	Our experience, I mean, you were saying the national actuaries were 
saying the total expenses will be lower and there will be a $5 billion cost 
lower this year.  If that just means it is lower because fewer people sign 
up for the plans than anticipated, that is not a real savings at all, and I 
hope you would separate that in doing your evaluation.
	DR. MCCLELLAN.  I agree.  The estimate is based on no changes in 
enrollment assumptions.  The change is all because of lower negotiated 
prices and lower cost of the benefit.
	MR. ALLEN.  Lower than anticipated?
	DR. MCCLELLAN.  Lower than anticipated, that is right.
	MR. ALLEN.  But not lower, necessarily, than the VA or Medicaid?
	DR. MCCLELLAN.  Well, again, our actuaries don't think that any of 
those other approaches would save any more money.
	MR. ALLEN.  I understand, but one of your predecessors said that he 
would not support a negotiation because if he did that, he would just be 
setting prices.  The clear implication was the price would be a lot lower 
if we negotiated prices.  This is one more in a series of questions.  I 
understand the Administration supports choice, and believes choice and 
competition will lower cost.
	DR. MCCLELLAN.  And it is doing so.
	MR. ALLEN.  But the Administration opposes allowing seniors to 
have a choice that will have a simple, uniform national plan run by 
Medicare, don't you?
	DR. MCCLELLAN.  Well, I haven't seen what that proposal is.
	MR. ALLEN.  That is a yes or no answer.
	DR. MCCLELLAN.  All of these plans are overseen by Medicare.
	MR. ALLEN.  I know, I know.  But my question is--
	DR. MCCLELLAN.  The last time--
	MR. ALLEN.  Dr. McClellan, my question is simple.  You oppose, do 
you not, having a national prescription drug plan run by and through 
Medicare, not private insurance companies where there would be a 
negotiated price?
	DR. MCCLELLAN.  Yes, because I haven't seen an approach to doing 
that that could deliver as much drug coverage at as low a cost as what we 
are seeing now.  The last time--
	MR. ALLEN.  But you don't want people to have that choice.  Well, 
the bill is H.R. 752.
	DR. MCCLELLAN.  What does it cost?
	MR. ALLEN.  So my question to you, beyond that, is real simple.  
You support choice, but that choice you are not willing to provide and 
that is the simplest, cleanest choice available.  One plan all across the 
country, all Medicare beneficiaries with a formulary set by Medicare.
	DR. MCCLELLAN.  A national plan with a national formulary would 
not give beneficiaries the opportunities for savings and better benefits 
that they are getting right now.  I would be happy to hear more about 
this.
	MR. ALLEN.  I just haven't seen any details of this proposal, how 
much it will cost, what it would involve.
	DR. MCCLELLAN.  All these plans are Medicare plans that we are 
overseeing to make sure they meet all--
	MR. ALLEN.  Private insurance company plans that Medicare is 
overseeing, right?  Private insurance plan.
	DR. MCCLELLAN.  And just as in previous Democratic proposals, 
there would be a privately run PBM or plan.
	MR. ALLEN.  With all due respect, Dr. McClellan, there are other 
proposals and we have had them and they are out there and I am sure 
your staff knows about them.  Thank you.
	MR. DEAL.  All right, that concludes the questions from members of 
the subcommittee and I thank you for your patience.  Dr. McClellan, it is 
interesting to me that we are only 60 days into this and it is also obvious 
that many adjustments have been made to overcome many of the initial 
problems.  If we could just get a federally run program to operate as 
quickly as the private industry has been able to adapt and make changes, 
I think we would all be satisfied.  Those of us who have Social Security 
beneficiaries who are waiting years for determinations with a 
government agency would say we would wish that in 60 days we could 
make the kind of adjustments that we have seen the private plans be able 
to make.  We thank you for your attendance here today.
	DR. MCCLELLAN.  Thank you and I would just like to say for any 
beneficiaries who are watching to let them know that they can call 1-800-
MEDICARE if they have any questions about what this program means 
for them.  We can give them some personalized answers so they can take 
advantage of it.  Thank you.
	MR. NORWOOD.  Chairman Deal.  Chairman Deal.
	MR. DEAL.  Yes.  I would like to ask unanimous consent that we 
insert into the record, right at this point, what the actual cost would be, 
what the score is on H.R. 752 for the record.
	MR. DEAL.  Without objection.
	[The information follows:]

        No cost estimate for H.R. 752 had been received from the Congressional 
Budget Office as of the date of printing for the hearing.

        MR. DEAL.  All right, thank you for being here, Dr. McClellan.  I 
will call the second panel up and as you are coming--
	MR. ENGEL.  Mr. Chairman.
	MR. DEAL.  Yes.
	MR. ENGEL.  I am wondering if I could ask unanimous consent to 
ask Dr. McClellan a question.
	MR. DEAL.  Mr. Engel, you are not a member of our subcommittee.  
You have not been here for any of the hearing.  We have got a second 
panel and we are going to lose some of the people if they don't get to 
testify because they have got airplanes to catch.  I will allow you to ask 
questions in writing to Dr. McClellan, as other members have done for 
additional questions.  I will allow you to ask questions at the conclusion 
of the second panel for anyone who is on that panel.
	MR. ENGEL.  Well, Mr. Chairman, with all due respect, the message 
we got from your staff is that I would be allowed to ask questions if I 
came in at the end and I was listening.  I have been in my office.
	MR. DEAL.  Mr. Engel, I am not going to get into an argument with 
you.  As you know, I have extended this courtesy to you in the past on 
times when, as today, you have never attended to hear the testimony of 
the witnesses.  You have never been in the presence of the rest of us who 
have listened to the questions and the answers.  In the past experience, 
your questions have repeated questions that members of the panel have 
asked.  Now, I have been patient with you in the past, but we have eight 
people out here who are waiting to testify.  They have been here since 
two o'clock today and I think, in all due courtesy to everybody, we need 
to get on with that second panel.
	MR. ENGEL.  Well, you know, Mr. Chairman, I have been in 
Congress 18 years and I have never, frankly, with all due respect, seen 
anyone as discourteous as you acting as a chair.
	MR. DEAL.  Well, I have been here for 14 years and I have never 
seen anybody come in at the last minute and expect, as a non-member of 
this subcommittee, to interfere with the rest of the operation.
	MR. ENGEL.  Mr. Chairman, I am a member of the committee.  This 
has never been done--
	MR. DEAL.  You are not a member of this subcommittee.
	MR. ENGEL.  Well, particularly, when your staff has given 
misinformation.  I was listening to every minute of this hearing in my 
office and I think it is an absolute disgrace, Mr. Chairman.
	MR. DEAL.  Well, thank you.  I am glad you did.  Well, I am sorry 
that you feel that way.
	MR. ENGEL.  Well, you don't have to be sorry.
	MR. DEAL.  If you would take time, and if you would come be with 
the rest of us, you would have the opportunity to ask questions.
	MR. ENGEL.  You are disgraceful.
	MR. DEAL.  We have been here for three hours, we will be glad to 
indulge you.  Will the second panel please take their seats?
	MR. ENGEL.  Typical of the way your party runs this House.
	MR. DEAL.  Once again, thank you all for your patience.  It has been 
a long day.  I know you have had to sit and wait and listen, but we are 
pleased that you are here.  I am going to introduce you all and then we 
will go directly into questions, your testimony, rather.  I believe we have 
our two lay witnesses who have some time constraints and we are going 
to let you two go first, and we will get to you in just a second.  First of 
all, and my introductions are not going to be in the way you are lined up 
the way the name tags are here.  Ms. Susan Rawlings, who is President 
of Senior Services of WellPoint, Incorporated; Ms. Anne Dennison, who 
is a constituent of Dr. Norwood from Hiawasee, Georgia; Mr. Dennis 
Song, who is a constituent, I believe, of Dr. Burgess, as has already been 
referred to.  He is here on behalf of the National Community Pharmacist 
Association.  Mr. Tom Paul, who is the Chief Pharmacy Officer for 
Ovations, United Health Group; Mr. David Lipshutz, who is the Staff 
Attorney for California Health Advocates; Mr. Earl Ettienne, is that close 
enough?  Okay.  Who is the Senior Supervisor for CVS Pharmacy and I 
believe you are here in the Washington area, is that correct?  Ms. Jude 
Walsh, who is the Special Assistant to the Governor's Office of Health 
Policy and Finance in Maine; and Mr. Marcus Hickerson, who is from 
Waxahachie, Texas.  We are pleased to have you, as well.  And we will 
do this in a little bit of reverse order and I hope the rest of you will 
understand on this.  Ms. Dennison, we are going to start with you, if you 
would please make your statement.

STATEMENTS OF ANN DENNISON; MARCUS HICKERSON; DENNIS SONG, FLOWER MOUND HERBAL 
PHARMACY, ON BEHALF OF NATIONAL COMMUNITY PHARMACIST ASSOCIATION; TOM PAUL, 
CHIEF PHARMACY OFFICER FOR OVATIONS, UNITED HEALTH GROUP; JUDE E. 
WALSH, SPECIAL ASSISTANT, GOVERNOR'S OFFICE OF HEALTH POLICY AND FINANCE, 
STATE OF MAINE; EARL ETTIENNE, SENIOR RX SUPERVISOR, CVS PHARMACY; DAVID A. 
LIPSHUTZ, STAFF ATTORNEY, CALIFORNIA HEALTH ADVOCATES; AND SUSAN 
RAWLINGS, PRESIDENT, SENIOR SERVICES, WELLPOINT, INC. 

        MS. DENNISON.  Thank you for the opportunity to come before you 
and talk to you about the new Medicare prescription drug benefit and 
what it has done for me.  My name is Anne Dennison.  I am the daughter 
of a pharmacist.  I am 72 years old and I live in the north Georgia 
mountains in a little town called Hiawasee.  I have lived there for 28 
years.  I love it there.  Our community is very tightly knit; it reminds me 
of the way communities were in the 1940s during the war.  Everyone 
looks out for each other.  The air and the water are clean and the people 
are friendly.  Hiawasee is having its sesquicentennial celebration this 
March.  In fact, it starts this Saturday and you all are invited to come on 
down.  We would love to have you.
	I have raised one son in Hiawasee, the other two were raised 
elsewhere.  My son, Lewy, is here with me today.  Over the years I have 
had a few different jobs.  I have worked as a cashier, a bartender; I 
owned a restaurant, Ann's Place, and I also had quite a few health 
problems.  I have congenital heart disease, diabetes, osteoporosis, 
allergies, and I have had bronchial pneumonia four times.  I have also 
had two thyroid surgeries, one back surgery, and cancer removed from 
my tongue.  Two different times I have had shunts put in and one of the 
biggest peptic ulcers the doctors in South Carolina had ever seen.  So as 
you can imagine, I take quite a few drugs.  I take 14 regular drugs and I 
take eight over the counter and from the health food store drugs.
	I take Amaryl and Glucophage to control my sugar; a water pill 
called, and I can't pronounce it.  It is hydro something choro something 
zide.  That is all I can tell you.  I got Synthroid and Amitriptyline for my 
thyroid; Digitek, Lipitor and Isosorbide for my heart; Coumadin and 
Acupril for my blood pressure; Allegra for my allergies; Actonel for the 
osteoporosis; and I carry Nitroquick with me in case of a heart attack.
	With the help of my pharmacist, I chose a plan in November.  I had 
no problems enrolling.  I sent my application November 19th and I got a 
confirmation that I had coverage November 24th.  I chose the AARP plan 
because it allows me to continue going to Rite Aid where I have been 
going.  Also, I am active in the AARP and have used the discount card in 
the past.
	Before the Part D benefit became a reality, I was paying out of 
pocket for my drugs.  When I was paying for all of them, it was costing 
me over $700 a month.  However, for a while I was getting eight of them 
for free through the nurse practitioner at my doctor's office in Hiawasee.  
That brought the cost per month down to around $300 some a month.  
My Social Security check is only $560 a month, so if you do the math 
you can see what buying the drugs I needed to stay healthy did to me 
financially.  I would surrender my entire check to the pharmacy and the 
shortfall I would put on a credit card.  When my sons found out about 
this, they began sharing the cost of the drugs.
	And I have got another page.  Excuse me.  I have been to the 
pharmacy over a half a dozen times since my Part D coverage went into 
effect.  Not once has the total for my drugs cost me over $10.  I pay 
between $1 and $5 per prescription.  Obviously, this benefit has been a 
tremendous blessing for me.  I no longer have to rely on my sons for 
help.  I have paid off the credit card debt I had run up and now I am 
thinking about trying to enjoy life a little with the money I have saved.
	I appreciate the opportunity to come and tell you about my 
experience with Part D and thank you for passing this bill that has made 
such a difference in my health and my life.
	[The prepared statement of Ann Dennison follows:]

                  PREPARED STATEMENT OF ANNE DENNISON

        Chairman Deal and members of the Committee,
	Thank you for the opportunity to come before you and talk about the 
new Medicare Prescription Drug benefit and what it has done for me.  My name 
is Ann Dennison.  I'm the daughter of a pharmacist.  I am 72 years old and 
live in the North Georgia Mountains in a little town called Hiawassee.  I have 
lived there for 28 years.  I love it there.  Our community is very tightly 
knit; it reminds me of the way communities were in the 40's during the War.  
Everyone looks out for each other.  The air and water are clean and the 
people are friendly.  Hiawassee is having its sesquicentennial celebration 
this March and you are all invited to come down.
	I've raised one son in Hiawassee, the other two were raised elsewhere.  
My son Lewy is here with me today.  Over the years I have had a few different 
jobs.  I've worked as a cashier, a bartender and owned my own restaurant, 
Ann's Place.  I've also had quite a few health problems.  I have congenital 
heart disease, diabetes, osteoporosis, allergies & bronchial pneumonia.  I've 
also had two thyroid surgeries, one back surgery, had cancer removed from my 
tongue, two shunts put in and one of the biggest peptic ulcers the doctor in 
South Carolina had ever seen!  So as you can imagine, I take quite a few 
drugs.  I take Amaryl and Glucophage to control my sugar, a water pill called 
Hydrochorothiazide, Synthroid and Amitriptyline for my thyroid, Digitek, 
Lipitor and Isosorbide for my heart, Coumadin and Acupril for my blood 
pressure, Allegra for my allergies, Actonel for the osteoporosis and I carry 
Nitroquick with me in case of a heart attack.
	With the help of my pharmacist, I chose a plan in November.  I had no 
problems enrolling.  I chose the AARP plan because it allows me to continue 
going to Rite-Aid where I had been going.  Also, I'm active in the AARP and 
have used their discount card in the past.
	Before the Part D benefit became a reality, I was paying out of pocket 
for my drugs.  When I was paying for all of them it was costing me over $700 a 
month.  However, for a while I was getting eight of them for free through the 
nurse practitioner at my doctor's office in Hiawassee.  That brought the cost 
per month down to around $300 some months.  My Social Security check is only 
$560 a month so if you do the math you can see what buying the drugs I needed 
to stay healthy did to me financially.  I would surrender my entire check to 
the pharmacy and the shortfall I would put on a credit card.  When my sons 
found out about this they began sharing the cost of my drugs.   
	I've been to the pharmacy over a half a dozen times since my Part D 
coverage went into effect.  Not once has the total for my drugs cost me over 
$10.  I pay between one and five dollars per prescription.  Obviously, this 
benefit has been a tremendous blessing for me.  I no longer have to rely on my 
sons for help, I've paid off the credit card debt I ran up and now I'm 
thinking about trying to enjoy life a little with the money I've saved.
	I appreciate the opportunity to come and tell you about my experience 
with Part D and thank you for passing this bill that has made such a 
difference in my health and my life.

	MR. DEAL.  Thank you, Ms. Dennison.  Thank you for being here.
	MS. DENNISON.  If you all would please excuse me, and Mr. 
Hickerson, we got a plane to catch.
	MR. DEAL.  I understand that and we are going to get him just as 
quick as we can.  Ms. Capps, I think, wanted to introduce some of the 
panel here.
	MS. CAPPS.  I have to apologize very strongly for not being able to 
stay for this panel and my heart is with you all.  Your panel is so 
important.  I had made a previous engagement and I need to leave, but I 
didn't want to do so without saying a word just to thank Mr. Lipshutz, 
not just you particularly, but also your volunteers through a program that 
we call HICAP.  California Health Advocates supports it and it is an 
advocate for health insurance counseling and advocacy programs.  Its 
volunteers are all through the State of California, and they have been 
lifesavers.  We use them every day, 24/7, really, our constituents use 
them, and they have made a real difference during the implementation of 
this program and I wanted to mention that, and also the community 
pharmacists.  You are not from my State, but for all the community 
pharmacists across this country right now, we owe a huge debt of 
gratitude for getting us through this time.
	MS. DENNISON.  Ms. Capps, we have a program in Georgia called 
Georgia Cares.
	MS. CAPPS.  It makes a difference, doesn't it?
	MS. DENNISON.  And it has been great.
	MR. DEAL.  That is fine.  Mr. Hickerson, we will recognize you.  If 
you will get the microphone and pull it over there where you can be 
heard.
	MR. HICKERSON.  Thank you, Mr. Chairman.  Am I coming 
through?
	MR. DEAL.  No, you are going to have to push the button.
	MR. HICKERSON.  Now?
	MR. DEAL.  Yes.
        MR. HICKERSON.  Okay, thank you very much, Mr. Chairman, 
members of the committee.  My name is Marcus Hickerson from 
Waxahacie, Texas, which is in Chairman Barton's district, and I am 
pleased to have this opportunity to testify today regarding the Medicare 
Part D prescription drug plan.  Today I want to share with you the 
experience that my wife and I had in choosing our prescription drug plan 
under Medicare Part D.  I have been retired for 17 years from the 
petroleum refining and real estate industry and my wife and I have been 
Medicare Part A and B beneficiaries for 14 years.  Let me also add that 
my wife and I each take four medications on a regular basis.  The cost of 
these medications, the list price on those is approximately $5,000 a year.
	Now, after receiving the information on the various drug plans that 
became available in the fall of 2005, I began comparing Medicare-
approved private companies that offered the benefit plans under Part D.  
My efforts were focused primarily on Internet research of premiums, co-
payments, coverage gaps and available drugs covered by plans such as 
AARP, Medco, Wellcare, United American, Prescription Solutions, 
Aetna, Humana, and others.
	My wife and I have, for a number of years, purchased our 
prescriptions from Walgreens, which is only a few blocks from our home 
and Walgreens made available, off of their web site, a compilation of all 
the drugs that we had purchased over the past number of years, so it was 
very easy to pull out the drugs that we had purchased for the past 12 
months which did, indeed, include the list price of those drugs.  So with 
that schedule, it made it relatively easy to start comparison on the drug 
sites of the various companies.
	I found that the web sites, all of these, some 40-odd plans that were 
available to those of us in our area of Texas.  It was a useful resource and 
the information allowed me to reasonably compare the formulary of each 
plan and plan the best match for our needs.  Although I invested a 
considerable amount of time in reviewing the requirements and benefits 
associated with each plan, I felt satisfied that I had accessed all the 
information I needed to make an informed decision.  As far as the 
research that I put in, I probably invested some 15 to 20 hours of Internet 
time over what perhaps was a two to three week period in making my 
review.
	It is important to note that we did not select a plan that did not 
cover the $250 deductible.  In the end, my wife and I selected two different 
plans that would best fit our individual medication needs.  I estimate that 
we will receive joint annual savings of approximately $2,400 a year off 
of the list price that were shown in the Walgreen printout.  That $200 a 
month will come in very nice as far as our overall budget is concerned.
	Now, finally, I would like to say that there are two important things 
that I would like to share with this committee as far as the program is 
concerned.  I feel that the key to this new initiative, of course, is choice.  
As you can see, from my experience, the options available for my wife 
and I to select a specific plan that best fit each of our unique medication 
needs was available with a reasonable amount of research.  Of course, 
one size does certainly not fit all, and that was the case that we found.
	Now, secondly, I would urge all of the seniors who are eligible, to 
sign up in this plan.  Before they pick a plan, I would encourage them to 
take advantage of the information and resources available to shop around 
for a plan that best fits their healthcare needs.  Just like shopping for the 
best rate on homeowners insurance, mortgages or any other item that we 
purchase, the process of selecting a plan is not unlike those that we face 
every day.  Do I have any complaints?  Absolutely none.  Do I have a 
concern?  Yes, I have a concern.  Levitra is included in my formulary.  
Now, at age 79 I have a concern because my plan allows for a monthly 
supply of Levitra to be purchased for a co-payment of $15.  My concern, 
of course, is that that monthly quota is only four tablets.  Now, at 79, I 
will wait for another several months before I decide if my concern 
becomes a complaint.  Thank you, Mr. Chairman.  It is good to be with 
you today.
	[The prepared statement of Marcus Hickerson follows:]

                  PREPARED STATEMENT OF MARCUS HICKERSON

        Good afternoon, Chairman Deal and members of the Committee, my name is 
Marcus Hickerson from Waxahachie, Texas, which is in Chairman Barton's 
District, and I am pleased to have the opportunity to testify before you today 
regarding the Medicare Part - D prescription drug benefit.  
        Today, I want to share with you the experience that my wife and I had 
choosing our prescription drug plan under the new Medicare Part-D program. 
First, I have been retired for 17 years from the petroleum refining industry 
and my wife and I have been Medicare Part-A and Part-B beneficiaries for 14 
years. Let me also add that both my wife and I currently take four medications 
each. We spend approximately $5,000 (list price) a year on these medications.
        After receiving initial information from different drug plans in the 
fall of 2005, I began comparing Medicare-approved private companies that 
offered by new Medicare Part-D plans in my area.
        My efforts were focused on internet research of premiums, co-payments, 
coverage gaps and available drugs covered by plans such as AARP, Medco, 
Wellcare, United American, Prescription Solutions, Aetna and several others.
        My wife and I currently fill our prescriptions at Walgreens. Because 
we fill all our prescriptions at Walgreens it was very easy for us to compile 
the list of our respective medications. It was very important to have this 
list of medications because that became a key ingredient to selecting the 
right Medicare part-D plan. Also, by looking on the Walgreens website I was 
able to compare the prices we paid for these medications, which 
made it very simple to see how much we would be saving with Medicare.
        I found each company website a usehl resource of information that 
allowed me to reasonably compare the formulary of each plan and find the best 
match for both our needs. Although I invested a considerable amount of time 
reviewing the requirements and benefits associated with each plan, I felt 
satisfied that I had access to all the information I needed to make an 
informed decision on the plans we selected.
        It is important to note that we did not select a plan that did not 
cover the annual $250 deductible. In the end, my wife and I selected two 
different companies that would best fit our individual medication needs. I 
estimate that we will receive a joint annual savings of approximately $2400 
off list price.
        Finally, there are two important points that I want to share with the 
Committee and with other program eligible seniors. First, I feel that the key 
to this new initiative is choice - as you can see from my experience the 
options available allowed my wife and I to select a specific plan that best 
fit each of our unique medication needs. One size does not fit all and in our 
case that was certainly true.
        Secondly, by comparing the specifics of what each plan offered I was 
literally able to shop on-line and select the plan that best met our 
requirements. Before seniors pick a plan I encourage them to take advantage of 
the information and resources available and shop around for a plan that best 
fits their healthcare needs. Just like shopping for the best rate on 
homeowners insurance or on a mortgage, the process of selecting a plan is not 
unlike any purchase we have made throughout our lives.
        Thank you Mr. Chairman. I am pleased to respond to any questions that 
you and the other Committee Members may have.

	MR. DEAL.  Thank you very much and we do understand that you 
both have to leave.  We thank you again for your testimony here today.  
Anyone else on the panel that is under a real time press?
	CHAIRMAN BARTON.  Mr. Chairman, could I just?
	MR. DEAL.  Yes.
	CHAIRMAN BARTON.  I want to have the privilege to thank Mr. 
Hickerson.  He has been a long-time civic leader in the Waxahachie area 
and has been very friendly to me over the years.  I did not know that he 
was going to be a witness until he had already been asked to be a witness 
and after the fact, I was asked if it was okay that he had been asked.  I 
don't want the Members, my friends on the Democrat side, to think we 
planted him.  I didn't know about him until after he had already been 
approved and said he would testify, but I do appreciate him coming up 
from Waxahachie.  He has done more to help Waxahachie than almost 
anybody else in Waxahachie and I think he is a former Citizen of the 
Year.  I just went to the chamber banquet and I think I saw your name on 
that, so we do appreciate you coming and waiting while we saw Dr. 
McClellan's testimony and then asked him questions.
	MR. HICKERSON.  Joe, thank you very much and we are proud to be 
here to be our representative in Washington.
	CHAIRMAN BARTON.  Well, I am glad that you are having a positive 
experience with your program.  Do you think the average senior would 
go through the time that you went through to pick a plan?  Is that a valid 
criticism?
	MR. HICKERSON.  I certainly would hope so.  And there were 
occasions when there were organizations in Waxahachie, including 
Walgreens, where you could take your medical records down or the 
drugs that you use regularly and have a consultation with which of those 
plans fit their needs.  But I am sorry to say that not too many people use 
that information, and I did ask the Walgreen manager how many had 
taken advantage.  He told me out of our community of 25,000 and county 
population of about 130,000, that only 200 had requested that assistance.  
So I think there may be, on the part of a lot of our seniors, just some 
indication that they are not terribly concerned about their needs for this 
coverage.
	CHAIRMAN BARTON.  Well, thank you, sir, for coming.
	MR. HICKERSON.  Good being with you.
	CHAIRMAN BARTON.  Thank you, Mr. Chairman.
	MR. DEAL.  Yes, sir.  Thank you, Mr. Hickerson.  Mr. Song has 
indicated that he might also have a time constraint.  If the rest of you will 
indulge us, we will go to his testimony next.
        MR. SONG.  Thank you, Mr. Chairman.  Chairman Barton and 
Chairman Deal, thank you for allowing me to, and the fellow committee 
members, thank you for allowing me to share my real life personal 
experiences.  I was listening to Member Bilirakis and he had made a 
point that he said that we should approach this with an open mind and I 
believe he said a willingness to learn, and that is how I approach 
everything.  If you note in my testimony, I own Flower Mound Herbal 
Pharmacy, so I deal on the alternative side.  And I wish Dr. McClellan 
was here because vitamins can improve your health, and they actually 
can reduce drug costs and I can prove that every day.  But I had been a 
chain pharmacist for over 20 years.  March the 8th, which is next week, I 
will celebrate my eighth year as an independent pharmacy owner.  I am a 
member of the National Community Pharmacist Association and Texas 
Pharmacy Association and a graduate of the University of Texas at 
Austin.
	To tell you a little bit about myself, my pharmacy is like most family 
owned pharmacies.  I employ 11 employees.  I have over nearly 40,000 
patients that come to the pharmacy for their medicines, their dietary 
herbal supplements, and their flu shots.  We give 6,000 to 8,000 flu shots 
per year.  In fact, we give more than the county health department.  And I 
supply a lot of the physicians with their immunizations, too.  I also give 
advice about the medicines and dietary supplements.  I give talks, in-
services to school nurses, county health departments, physicians' offices, 
and kind of established myself as the central prescription drug and 
healthcare information center for the community.
	One of the things I do that I specialize in is compounding or custom 
prescriptions and I want to share just a real anecdote.  I make a lot of 
prescriptions for pets and you wouldn't believe what some of the pets, 
some of the conditions they have.  They have conditions like we do; high 
blood pressure, high cholesterol, anxiety, depression, psychoses.  I made 
a preparation for a cat with anxiety that the veterinarian could not get the 
cat to take this preparation, so what I did was I went to Sam's, bought 
StarKist tuna, drained off the water, dissolved the medication in the tuna 
and the cat loved it.
	As far as Medicare Part D, I took steps above and beyond to prepare 
myself and my staff and also the other pharmacists in my community.  I 
am the president of the Denton County Pharmacy Association, which is 
the county association.  I have been that for the last 12 years.  So what I 
did personally is I hosted an NCPA-sponsored Medicare Part D CE 
program for two hours.  I required all my staff to listen to a 
teleconference, an hour teleconference.  We had staff meetings, and we 
kind of established ourselves as the point pharmacy in our community 
for Medicare Part D questions.  Even with all that, I also made 
presentations, and I continue to make presentations, to Rotary Clubs, to 
senior groups, and to hospital groups.  Even with that preparation, the 
first two months of this program have been very difficult for me and my 
patients.
	As a small business owner, it has been a struggle.  The problems are 
pretty well documented.  Primarily, the transfer of information of CMS 
to the different health plans; there have been a lot of problems with the 
dual eligibles.  Dr. Burgess called me about two weeks after it 
implemented, about the second week in January and truthfully, anyone 
that knows me knows that I will speak the truth and I will be very 
upfront and very blunt sometimes, and the first thing that comes out of 
my mouth is well, it hasn't been that bad.  Then I realized I only have 
two dual eligible patients that use me.  When they came in, both of them 
didn't work.  One was because they weren't enrolled properly, because 
information was transferred improperly.  And the other part was our 
State is undergoing another transition, too.  They are handing their 
processing of their prescriptions to a private plan, health plans and there 
has been delay of payment there, also.
	In fact, one of the pharmacies in Victoria, he owns five pharmacies, 
he has an outstanding debt of $170,000 right now that he has been going 
into.  But I answered Dr. Burgess and I said for me, personally, it hasn't 
been that bad, but then I realized I haven't really been exposed to that 
many of the seniors and it is because what I realize, and my problems 
really started the end of January and this month, is because the seniors 
stocked up at the very end of the year because they were anticipating 
some problems, so they didn't get their refills until just a few weeks ago 
and now is where we are experiencing the problems because we are 
seeing those recipients come in with their new cards or their new letters.
	To give you an example, I have about 50 plans in my region and Mr. 
Hickerson talked about choice and I believe there is choice, this is a free 
enterprise system, but for an independent pharmacist there is no choice.  
There are 50 plans in my area, I have to enroll in every single one of 
them and hope that the reimbursement is enough to cover my cost, which 
a lot of plans, they are.  I can be exclusionary, but then I lose my 
patients, so there is no choice for independent pharmacists.  We have to 
accept every plan that is out there.  And the contracts are not negotiable.  
Regardless of what they say, we cannot line item, we cannot change 
anything.  We accept it or we reject it as is.
	I have two pharmacists.  One has a retired father that is a pharmacist 
in Birmingham, Alabama and they went on the web site.  It took them 
four hours and they did finally wade through it, but it took two 
pharmacists, a retired pharmacist and a practicing pharmacist, to wade 
through the web site.  Sometimes the problems we have been 
experiencing lately are the hold times.  Even though they have gotten 
better, we still experience hold times.  The plan help desks are still 
overloaded.  We have, in the past, gotten false rejection codes saying 
member not on file, pharmacy not participating.  It really turned out to be 
a wrong date of birth, maybe a wrong ID number.  Since then, that 
slowly had been corrected.  The prescription claims are going through, 
like I had mentioned, the wait time has decreased, but you know, I don't 
think it is fair to the Medicare recipients or the community pharmacists 
to have up to sometimes one hour wait times, especially when you are 
doing 100 to 200 prescriptions a day, which is a fairly low volume for a 
pharmacy.
	There has been some dialog between NCPA and CMS, and if Dr. 
McClellan was here, I would say thank you and especially to Secretary 
Leavitt who said all of our, as far as community pharmacists, our efforts 
were heroic.  We are not heroes.  We are very, very compassionate.  We 
are healthcare providers and the patient is the utmost, the beneficiary is 
the utmost important, or the most important person.  One of the things I 
have done is I have tried to, I have given CE programs to physicians' 
practices and nurse practitioners, this was the two a couple of years ago 
when the prior authorization process really rolled in, to try to explain the 
managed care prior authorization process and I always try to approach 
everything objectively.  I don't try to blame anybody.  That doesn't win 
in any case.
	But I have trouble now trying to explain objectively why their 
medications are being switched, or why they are being solicited to being 
therapeutically switched and is it due to the rebates?  Is it in their best 
interest?  The PNT committees Dr. McClellan talked about, who are they 
comprised of and do they know the specifics of that physician's patient 
and is that the best medication for them?  There are a lot of drugs in a 
therapeutic class, but each one has side effects inherent in characteristics 
to each drug, so I believe it is up to the physician, along with the work 
with the pharmacist, to select the drug that is most appropriate and safest 
for that patient.
	Real quickly, I am going to wrap up by saying that I would like to 
share with you a couple stories.  I have had one patient that, in the Dallas 
morning news about two weeks ago, maybe three weeks ago, there was a 
statement from Secretary Leavitt saying that, and it was repeated by Dr. 
McClellan as saying our patients should not leave the pharmacy counters 
without their prescriptions.  The pharmacists have tools to ensure that.  
Well, he was a newly diagnosed diabetic.  He had just gotten over the 
shock of being diabetic, being diagnosed diabetic, had to buy strips, a 
blood glucose monitor, and he didn't want to do that.
	Then it came to his medications.  His plan said he paid $8.50.  Well, 
he wasn't enrolled in his plan because of some mis-transfer of 
information.  So after trying to explain to this patient, a newly diagnosed 
diabetic, that I couldn't submit his prescription.  By the way, that is how 
a prescription is adjudicated or a claim is submitted, simultaneously at 
the time that you fill a prescription.  So it is either make the patient wait, 
or you give them the prescription.  Anyway, he brought this news article 
to me, circled it, and he said, you know, they said that you would take 
care of me, you wouldn't let me leave.  So there were a couple things, 
because I had no confirmation, I didn't even know what process or what 
plan he was on.  He knew he had it, he knew he submitted it, but what I 
basically did is I gave him, for his co-pay, and tried to explain to him, for 
the $8.50, this is out of my pocket, $18.  And hopefully, we will get it 
resolved.  Hopefully, the next time you come in it will be covered under 
your plan.
	The other one was a friend of mine and for the sake of time, and I 
don't want to take away from any of the other participants, but we call 
ourselves family pharmacists because, you know, all our patients are our 
family and that is a big distinction of the independent pharmacist.  When 
she knew, after countless hours of trying to wade through which plan is 
best for that patient, so after countless frustrating hours of trying to select 
the best plan for her, and she was on at least eight different medications.  
She was a breast cancer survivor and she has been my patient for over 20 
years, so she is very near and dear to me and we have a very candid and a 
very close relationship.  After hours of trying to figure out the best plan 
and not finding one out, she told me three things and I would like to 
leave with this, and I wish Dr. McClellan was here.  She told me thank 
you, you are doing your best, and please don't let us seniors down.
	With that, the rest of my testimony, I think you have copies of, but in 
conclusion, I would just like to say I love being a pharmacist.  Most 
pharmacists are in this profession because we love taking care of people.  
Even despite we want this Medicare system, we know it is a benefit, we 
want it to work.  Dr. Burgess was kind enough to outline the concerns 
that we have and we are here to help you try to make this work.  Thank 
you.
	[The prepared statement of Dennis Song follows:]

PREPARED STATEMENT OF DENNIS SONG, FLOWER MOUND HERBAL PHARMACY, ON 
BEHALF OF NATIONAL COMMUNITY PHARMACIST ASSOCIATION

        Good Morning, Chairman Barton, Representative Deal, and members of the 
committee.  Thank you for conducting this hearing and for providing me the 
opportunity to share the experiences with the new Medicare Part D program on 
behalf of the more than 24,000 community pharmacies and their patients.  
        My name is Dennis Song and my family pharmacy is Flower Mound Herbal 
Pharmacy in the Dallas-Ft. Worth Metroplex.   I have worked in chain pharmacy 
for the first 20 years of my career and have owned my pharmacy for 8 years.  I 
am a member of the Texas Pharmacy Association, the National Community 
Pharmacists Association, and a graduate of the University of Texas.
        My pharmacy is like most family owned pharmacies..it employs 11 
employees and have nearly 40,000 patients that come to the pharmacy for their 
medicine, dietary supplements, their flu shots, and for advice about their 
medicine.  I also have many doctors, school nurses, and the county health 
department that utilize my pharmacy for drug and healthcare information.   In 
a sense my pharmacy acts as the central medication information center for my 
community.
        I make customized medications for patient's pets.  For example, just 
last Tuesday I made a cat anxiety medicine and drained tuna cans to give it a 
tuna flavor. I deliver prescriptions to my patient's home if they want me to 
and I open after hours when patients need their medicine.
        Like most every other pharmacist I know, I prepared for the Medicare 
Part D benefit by reading as much as I could and going to programs.  I 
required my staff to attend educational programs and teleconferences to make 
sure they were prepared to help patients.   I also gave Medicare Part D talks 
to the Rotary Club, senior and hospital groups.  Despite my preparation, the 
first two months of the program have been very difficult for me as a small 
business owner and, most importantly, a struggle for my patients.
        The problems have been well documented-there were problems with the 
transfer of patient information between CMS and plans, there were early 
problems with the eligibility inquiry system, and there was a lot of confusion 
among dual eligibles and other senior patients about which plan they were on 
and what they needed to do to navigate the system.  At our pharmacy-and in 
thousands of others across the country-we did what we could to help patients. There are about 50 plans in my region but we tried to answer as 
many questions about plans as we could.  Two of the pharmacists that work for 
me spent hours on the Medicare website trying to help their parents get 
enrolled. If it takes a pharmacist a couple of hours to enroll, there's no way 
an elderly patient should be expected to go through a website.  Plus, I could 
count on one hand all of my senior  patients who have a computer.  Factor in 
the indigent, the dual eligibles, and its not surprising there was so much 
confusion.  
        We called plans and were on hold sometimes for close to an hour before 
we finally gave up.  We did our best to make sure that patients were able to 
stay on their medication while we worked through the insurance hassles by 
giving them emergency supplies of their prescriptions.  During the first 
couple of weeks, we gave an emergency supply to 20 percent of the elderly 
patients who came in the pharmacy-we want to make sure our patient's don't do 
without.  Last, but not least, we opened up a line of credit at the bank 
so we could pay our bills but I'll talk more about that a little later. 
        Things have improved in the last few weeks but there are still huge 
problems for the patients that will continue if needed changes to the program are not addressed.  Prescription claims are going through much more often than 
they were but there are still quite a few that are rejected as unpaid-
especially at the first of the month.   The wait times on the phone have 
decreased but they are still running 5-10 minutes per call-but much better 
than an hour.  When you are trying to fill two hundred prescriptions a day, it 
makes for an unacceptable situation for the pharmacy and for the patient.  
        My national association, NCPA has told me that there is an ongoing 
dialogue between CMS staff and the pharmacies and the CMS advisement 
increasing the time for transitional fills to 90 days has helped delay the 
problems that patients will have when the plan formularies are enforced.  
However, I do worry about patients when those formularies kick in. The 
pharmacists will have to try to explain to patients and their caregivers that 
the blue pill for their heart that they have been taking for years has been 
switched to a yellow pill that should do the same thing.  That creates serious 
confusion and frustration for seniors.  On top of that, I always ask myself if 
that is the best medicine for my patient.  Plans change their formularies all 
the time depending on who is giving them the biggest rebate.  It concerns me 
that patients might get confused or just fed up and stop taking their 
medicine.
        As I mentioned, we try to make sure our patients don't have to do 
without their medicine.  As an example, I had a newly diagnosed diabetes 
patient who came in with the front page of the Dallas Morning News quoting 
Secretary Leavitt saying that "no patient should leave the pharmacy without 
their prescription."  He had actually circled the quote. He had enrolled in 
the plan but the plan had not entered him into his system. We tried to 
explain the situation to the patient but he kept referring to the newspaper 
quote. I wound up selling the medicine to him for what his co-pay should have 
been which was $18 below my cost.  What made it even worse was that there were 
two other patients-one who was another Medicare patient--who walked in and 
walked out because I was too busy trying to help the Medicare patient.
        I mentioned the line of credit I opened so my pharmacy could pay its 
bills.  One of the big problems with Medicare Part D is that the payments from 
the plans are slower and lower.  By slower, I mean that for the dual 
eligibles, we used to receive payments from the state Medicaid program every 7 
days.  Under the new program, we are only supposed to get paid every 2 to 4 
weeks but I have to pay my wholesaler bill weekly. 
        The plans make it difficult to tell what prescriptions have been 
submitted and what have been paid for.  Some of the larger plans have also 
found reasons to delay payment.  The point of the program is not for the plans 
to make money on the float but for me, it's made cash flow tight.  I've been 
in business for 8 years and for the first time I've had to open a line of 
credit. I've almost maxed out the line and now I'm afraid my next move is 
to go into personal savings to try to cover the costs.  It's scary.  I know of 
a few pharmacies like mine that have already gone out of business over in the 
Valley in South Texas and I think there will be many others that will also 
have to close their doors if some changes to the program aren't made. Why are 
we being asked to both serve patients on the front lines and be the bank for 
the program?  Unlike banks we collect zero interest for the money we are being 
forced to provide loans.  
        Some of the changes that I think should be made to the program are:

        1) There needs to be a prompt pay provision.  
                Electronic Fund Transfers are done everyday with credit cards 
and banks.  There is no reason why Plans couldn't pay the pharmacy on a daily 
basis or at least on a weekly basis.  Pharmacies have no ability to negotiate 
with the plans-the contracts are take it or leave it-so we need CMS to step in 
and tell plans that they must pay the pharmacies with a daily EFT.
        2)The prescription cards that the plans issue should not be allowed to 
have a company specific logo on it.  
                For example, one plan puts the Wal-Mart logo on their card.  
That seems outrageous to me and will make some patients think they have to 
switch pharmacies.  Pharmacists are strictly prohibited from steering patients 
but the logo of a chain pharmacy is allowed on a card? Again, we need CMS to 
tell the plans-not just recommend--that they can't put a pharmacy logo on a 
patient's prescription card or there needs to be legislation to correct this 
situation.
                Pull out your social security card.  Is there an advertisement 
on that card?  There should not be any advertising that serves as proof of 
admission to Medicare Part D.  This is a clear violation of the anti-steering 
provisions spelled out in the marketing guidelines issued by CMS. 

        3) Patients, doctors, and pharmacies need a standardized method of 
dealing with the plan formulary issues.  
                Right now, if a prescription is not covered, a lot of plans 
send the pharmacy a message that says "drug not covered".  That's it.  No 
explanation as to why it was not covered.  So, the pharmacy has to call the 
plan and find out why the drug is not paid for and what needs to happen to 
help the patient get their medication.  The pharmacist then has to coordinate 
the paperwork between the patient, the doctor, and the pharmacy in order to 
help the patient get their medicine.  This can take hours or even days.  After 
all that time, the patient hopefully has not given up on the process and 
decided not to take their medicine.
                There needs to be standardized messaging between all of the 
plans when they communicate with pharmacies and a standardized prior 
authorization procedure that reduces the administrative burden on patients, 
doctors, and pharmacies.  

        4) Enrollment period needs to be realistic
                Patients were told that they could enroll as late as the end 
of the month and be in the system by the next day.  That doesn't happen and is 
not a realistic expectation by anyone in the system. The result is that 
beneficiaries are frustrated and pharmacy staff have to chase down claims to 
try to help get the prescription paid.  This unrealistic expectation creates a 
chain reaction that upsets the entire benefit. Dual eligible patients should 
have a deadline of at least 15 days and non-dual eligibles should have at least 30 days to be entered into the system.  

        5)	Standardized Contract Rate
                Pharmacies have dozens of plans offering take it or leave it 
contracts.  Family owned pharmacies have no ability to engage in any form of 
legitimate negotiations.  As a result we are forced to sign contracts that 
reimburse us below our cost.  We believe CMS should use its authority to 
provide reimbursement guidelines to plans or there needs to be legislation to 
address the situation so that pharmacies are able to stay in business and 
continue to provide the services I have described here today for the American 
public.

        In conclusion, I would add that I enjoy being a pharmacist and I 
believe I am making a difference in the thousands of patients who come in my 
pharmacies.  However, I am very concerned that the slower and lower Medicare 
payments this year on top of the massive Medicaid cuts that Congress passed 
last month will force thousands of family pharmacies to go out of business and 
strand millions of patients without access to the medicine they need to help 
them stay healthy.
        Thank you again for inviting me to share my experiences with the 
Medicare Part D program with you.

	MR. DEAL.  Thank you, Mr. Song.  We appreciate what you do and 
please convey to your members of your association our appreciation for 
what they have done to try to get over these rough spots and I think it 
will get better.  Mr. Paul, we are going to go to you next and then we will 
come back down the line.
        MR. PAUL.  Thank you, Chairman Deal and other distinguished 
members of the Health Subcommittee and honored guests, for the 
opportunity to testify before you today about the implementation of the 
new Medicare Part D benefit.  My name is Tom Paul and I am a 
pharmacist and the Chief Pharmacy Officer for Ovations, a United 
Health Group business that focuses all its attention on individuals 50 and 
older.  That population is the primary users of the Medicare and 
Medicaid program.  Our participation in these programs is really 
fundamental to our core mission and that is to facilitate broad and direct 
access to affordable, high-quality health care that helps individuals, 
families and communities to improve their health and well-being.
	Implementing Medicare Part D was and is an enormous and 
ambitious endeavor.  Clearly, in its early stages the program has 
experienced major shortcomings.  These shortcomings are a major 
concern for all of us, which is why we are here today.  I would like to 
provide you with a brief overview of our company's efforts around Part 
D, and our efforts to resolve some of these initial challenges.  I 
encourage you to reference my written testimony for further detail.
	I am pleased to report that through coordinated efforts of many, we 
have seen the beneficiary experience dramatically improve, especially in 
comparison to the first weeks when the program began.  Through Part D, 
many beneficiaries are receiving prescription drug coverage for the first 
time.  Millions of seniors are seeing real savings on each prescription 
they purchase in comparison to prior to January 1st.  Moreover, Part D 
coverage is providing millions of other beneficiaries a safety net in case 
they need to use prescription drug benefits in the future.
	Nonetheless, much remains to be done to make sure the program 
works successfully for all beneficiaries and most importantly, that those 
who need the coverage most are signing up.  We are committed to make 
sure that the system works as it should for every beneficiary.  I should 
note that tremendous preparation went into launching the program.  
Ovations put significant efforts and resources into technology, enhanced 
pharmacist information and support and expansion of and training within 
our call centers, and customer service sites.
	Well before January we recognized the need for consumer education 
and we launched a broad national consumer program around Part D.  
This outreach included events across the country, dissemination of 10 
million consumer booklets in multiple languages, and other initiatives 
specifically targeting the low-income population.  This outreach was 
intended to ensure that eligible individuals would understand their 
options and know how to access and make full use of the new drug 
benefit program that was available to them under Medicare.  That said, as 
Part D launched, it became very clear that the program was not working 
as well for all beneficiaries.  Specific problems were caused by 
incomplete, inaccurate enrollment and eligibility information received by 
the health plans, including delays and that data transfer between CMS, 
the health plans, and pharmacies.
	Also, a large number of late month enrollments and switches from 
one plan to another by duals and other low-income beneficiaries caused 
some of the challenges that we experienced.  These challenges in 
determining eligibility led to difficulties locating enrollees in the system 
when they came to the pharmacy.  It may have led to temporary 
classifications in the standard benefit plan to ensure that there was some 
level of coverage for beneficiaries, but it may have resulted in co-
payments that were higher than expected by that beneficiary.  All of this 
resulted in an unanticipated surge in call volumes, creating significant 
delays in response to both consumers and the pharmacists.
	As these challenges arose, we quickly reacted to address them.  
Everything we have done has been geared to making sure that no one 
leaves the pharmacy without the prescription drugs that they need.  
Ovations is doing everything possible to help ensure that these 
beneficiaries receive the assistance promised under the Part D program.  
More specifically, we worked on multiple fronts to ease the transition of 
enrollees and resolve the enrollment and information technology system 
issues.  We have been working aggressively with CMS, States, 
pharmacists, and other partners to ensure that the root cause issues of 
inaccurate and untimely eligibility are being resolved.
	We have taken numerous steps to ensure that low-income and other 
beneficiaries have immediate access to their Part D benefit, but also that 
pharmacists are in a position to help these enrollees.  My written 
testimony details these steps which range from rapid improvements in 
our call center operations and significantly enhancing pharmacist support 
to developing temporary solutions to meet the needs of low-income 
beneficiaries while longer term problems are being resolved.
	We continue to see steady improvements across the board.  Today 
United Health Group's Medicare Part D programs are largely working as 
intended for those recipients accessing the program.  More than 4.5 
million Medicare beneficiaries are successfully using the stand-alone and 
Medicare Advantage prescription drug plans today under United's 
programs.  More than 60 percent of them are non-duals who voluntarily 
enrolled in the Part D program.  On average, we are filling more than 
eight million prescriptions in each month that we have had the program 
in operation.
	A very low percentage of claims are now being delayed at the point 
of sale as the eligibility and enrollment issues have been resolved.  This 
means more and more beneficiaries are receiving their ID cards in a 
timely manner.  Complete billing information is being submitted to their 
plan and the pharmacists are getting access to the information that they 
need to make the prescription dispensed at the point of service.  Finally, 
call volumes are down and call wait times have vastly improved since the 
program began.
	Ultimately, though, the prescription drug program is really not about 
an individual plan, it is about the people.  And you have heard testimony 
today from Ms. Dennison and Mr. Hickerson, but we also have one 
person we would like to highlight, Fran Cooper, from Bellevue, 
Nebraska.  She actually had no intention of joining the Part D plan and 
she actually called us to make that known and to tell us why.  She was 
very opposed to the plan and what it meant, and the challenges she would 
face with it.  After we talked through the program with her and her 
concerns, I am happy to say that she has enrolled in a program.  She is 
using that program and she is now an advocate for others, telling them of 
the value that this program could mean to them.
	But just the fact that we have heard from these three individuals and 
others that we have heard about today won't satisfy us until the program 
works for all beneficiaries that need this important benefit.  We continue 
to work with CMS toward resolving the enrollment and eligibility and 
data issues with the States to address any remaining issues that remain 
for the dual eligibles.  We also are working with pharmacists to identify 
ways to further ease the transition to Part D.  You heard that from Dr. 
McClellan about plans that are working with the pharmacy associations 
in order to make their lives easier through things that we can do via 
standardization of the program.
	We have intensified our education outreach effort to make sure that 
we are reaching those that need to hear more information about the 
program.  We can't overstate the importance of reaching out to the lower 
income populations, particularly those not eligible for Medicaid, to 
understand the value that they will receive under Part D.  It is important 
to answer their questions and remove any barriers to their participation in 
the program, and we encourage others to undertake similar efforts.  More 
effectively managing the beneficiaries' expectations around enrollment 
and formularies is a key part of this.  Dr. McClellan also spoke of this.  
We appreciate the efforts of CMS and Members of Congress to 
encourage beneficiaries to enroll or switch plans early in the month.  
This will help ensure enrollment is completed by the first of the 
following month.
	Part D is an ambitious and valuable program that is helping millions 
of individuals on a daily basis to purchase the prescription drugs that 
they need.  This includes many who have previously not had access to 
drug coverage, and many more who would not qualified for greater 
assistance through other Federal or State programs, including Medicaid.  
United Health Group remains committed to working with you, CMS, 
States, pharmacists, and beneficiaries to ensure that Part D is working for 
all enrollees, especially those who have found the transition to Part D 
difficult.  We especially appreciate the committee's leadership in this 
important matter and thank you for the opportunity to share our thoughts.  
I would be happy to answer any questions that you might have at the 
appropriate time.
	[The prepared statement of Tom Paul follows:]

PREPARED STATEMENT OF TOM PAUL, CHIEF PHARMACY OFFICER FOR OVATIONS, UNITED 
HEALTH GROUP

Introduction
        Thank you Chairman Deal, other distinguished Members of the Health 
Sub-committee and Honored Guests for the opportunity to testify before you at 
today's hearing about the implementation of the new Medicare Part D drug 
benefit.
        My name is Tom Paul and I am Chief Pharmacy Officer, UnitedHealth 
Group/Ovations.  Ovations is UnitedHealth Group's business that focuses on 
meeting the healthcare needs of the over-50 population - the very group of 
Americans who are the primary users of Medicare.  Ovations and the other 
companies of UnitedHealth Group have extensive experience providing health 
care services to the federal government, state governments and private payers 
in many types of competitive environments.
        Our company has a long-standing commitment to enhancing health care 
for older Americans and other Medicare beneficiaries.  We are dedicated to 
helping them address needs for preventive and acute health care services, 
manage chronic conditions and respond to unique and often complex health and 
well-being issues.  Through Ovations and the rest of our family of businesses, 
UnitedHealth Group provides the most comprehensive array of health and well-
being services to these populations.  We are a major provider of services 
through the traditional Medicare fee-for-service program, health plans, and 
demonstration projects for the frailest beneficiaries of Medicare.  Together 
with PacifiCare, we are proud to be one of a handful of companies to offer 
Prescription Drug Plans in all 50 states.  
        Our participation in Medicare programs is fundamental to our core 
mission: to facilitate broad and direct access to affordable, high quality 
health care helping individuals, families, and communities to improve their 
health and well-being.  Our commitment is therefore to the beneficiaries, the 
programs and the taxpayers who support them, rather than to a specific product 
offering.
        With this in mind, we believe we can offer a valuable perspective on 
the new prescription drug benefit and appreciate the opportunity to testify 
before this Committee and to share our experience to date with its 
implementation.    

Early Challenges
        Medicare Part D is the most significant change in the Medicare program 
since its enactment more than 40 years ago.  Implementing a program of such 
unprecedented size and scale is an enormous and ambitious endeavor - and as we 
all know, Part D has experienced some challenges in its early stages.  We 
should note though that the Part D benefit is currently serving the majority 
of beneficiaries well.  As the Centers for Medicare & Medicaid Services (CMS) 
has reported, Medicare Part D plans overall are now contributing to the well-being of more than 25 million beneficiaries as of February 22nd, including 
more than 5.3 million beneficiaries who have signed up individually for 
prescription drug coverage.
        However, we are as concerned as all of you that the system has in some 
cases not worked well for all beneficiaries. This is especially true for a 
minority of low-income and dually eligible enrollees, largely due to 
unanticipated information gaps in the system.  Information on eligibility was 
not available to pharmacies for certain duals and other low-income 
beneficiaries in the way it should have been.  This was due to:
         Incomplete enrollment and eligibility information received by 
the health plans and delays in its transfer among CMS, health plans and 
pharmacies; and
         Late-month enrollments and switches from one plan to another 
by duals and other low-income beneficiaries leading to delays in posting 
eligibility information in the system.  
         For example, in the latter half of December, immediately 
prior to the January 1 program start date, we were receiving approximately 
75,000 applications per day.
        The resulting challenges in determining eligibility led to people not 
being found in the system or their temporary classification in a standard low-
income coverage tier, making their initial co-payments higher than expected.  
It also resulted in an unanticipated surge in call volumes, creating delays in 
response to both consumers and pharmacists.

Responding to the Challenges
        Since these challenges first came to light at the beginning of this 
year, our company has taken quick action on multiple fronts to help enrollees 
and pharmacists and resolve the situation, especially as it affects dual 
eligibles and other low-income individuals.  We have done, and are continuing 
to do everything we can to work with CMS, states, pharmacies, and other 
partners to help resolve outstanding enrollment and information 
technology system issues.  
        Parallel to this, Ovations has taken proactive steps to ensure as 
smooth a transition as possible for our enrollees and pharmacists - from 
making rapid improvements in call center operations and enhancing pharmacist 
support, to developing temporary solutions to meet the needs of low-income 
beneficiaries while longer-term problems are being resolved. Among the steps 
we have taken are the following:
         We acted quickly to ensure low-income and other beneficiaries 
would have immediate access to their Part D benefit regardless of whether they 
appeared immediately in the system, by:
                o Activating a beneficiary's plan coverage by "assuming" or 
"deeming" an individual's enrollment even before receiving confirmation of 
enrollment from CMS, where possible; 
                o Assigning beneficiaries to a subsidized co-payment class 
even in advance of a CMS confirmation;
                o Implementing in coordination with CMS a temporary "first 
fill" and transition plan process that permits new enrollees access to Part D 
covered drugs on an expedited basis; 
                o Making administrative adjustments, such as changing the 
medication supply window from 30 to 31 days to assist with claims processing 
from Long Term Care pharmacies serving institutionalized beneficiaries; 
                o Conducting outreach to beneficiaries whose enrollment may 
not have been confirmed by CMS in time for the 1st of the month start date 
(e.g., because they enrolled or switched plans late in the month) and advising 
them on how best to access their benefits early in the month; and
                o Lifting on a temporary basis prior authorization and step 
edit requirements on almost all medications in order to give pharmacists and 
enrollees ample time to adjust to their new Part D plans.  We retained prior 
authorization on four drugs for which our Pharmacy & Therapeutics Committee 
has special safety concerns for older adults.
         As I said, at the end of December, Ovations was receiving 
approximately 75,000 applications a day, and enrollment remains strong, with 
thousands of applications continuing to come in each day.  
         In order to meet the continued strong demand for our program 
and ensure high levels of service, we have increased our call center staff 
significantly.  
                o We now have more than 3,600 employees deployed at our seven 
call centers and continue to increase personnel and improve performance in our 
call center operations so that issues can be resolved "real time."
                o We immediately established a "hotline" with CMS in the first 
week of January for their case workers to escalate enrollee cases and are in 
constant communication with CMS to assist beneficiaries.
                o We also established a similar "hotline" for AARP.
                o Work is also underway to add two additional call centers to 
ensure continued high levels of service, with representatives in these call 
centers to be phased in over the next two to three months as they complete 
training.
                o I should note that our customer service representatives 
receive extensive ongoing training and daily updates highlighting important 
issues and how to resolve them. 
         We also expeditiously took steps to ensure that the system 
works more efficiently for pharmacists:
                o We have more than doubled the number of representatives 
available to assist pharmacists since January 1st.
                o We established a direct hotline for pharmacists to escalate 
and triage issues with enrollees, or finalize enrollment if there were 
application issues - all on the spot where feasible.
                o We are providing up-to-date information and support to 
pharmacists participating in the program - if necessary, on a near-daily 
basis.
         Finally, we are working closely with CMS to identify and 
address information gaps and to facilitate reimbursement to states for Part D 
costs they have borne for low-income recipients.
        On that last point, I want to express our deep appreciation for the 
steps being taken by the states to help address gaps in coverage for low-
income beneficiaries.  We are committed to seeing that the states are 
reimbursed in a fair and timely manner for prescription drugs covered by 
Medicare Part D.

The Results
        I am pleased to report that through the coordinated efforts of many, 
the program is functioning much better today than in the early weeks of 
January.  I am deeply encouraged by the stories I hear every day about people 
receiving prescription drug coverage for the first time and about seniors who 
are keeping more money in their pockets through the cost savings realized 
under their new Medicare Part D Plan.  Simply put: the Part D program is 
delivering real savings to seniors.
        At the same time, Part D coverage is providing seniors and others 
eligible for Medicare with a safety net in case they ever would need it.  The 
knowledge that they will be protected if their situations change and their 
drugs costs rise offers Part D beneficiaries some peace of mind - a truly 
valuable benefit for older Americans and their families. By all the data and 
enrollee accounts, UnitedHealth Group's Medicare Part D programs 
are working as intended for most recipients and we continue to see improvement 
across the board on a steady basis.
         Just two months into the program, we at UnitedHealth Group 
are proud to report that more than 4.5 million Medicare beneficiaries have 
enrolled in and are successfully using our stand-alone and Medicare Advantage 
Prescription Drug Plans.  
                o About 40% are individuals dually eligible for Medicare and 
Medicaid (so-called "duals" or "dual eligibles") and other low-income 
beneficiaries eligible for a full low-income subsidy. 
                o This means, in turn, that approximately 60% of our enrollees 
are non-duals and voluntarily enrolled in programs offered by UnitedHealth 
Group.
                o Of our duals, nearly a quarter or 25% of these beneficiaries 
actively selected and enrolled in a Part D program offered by UnitedHealth 
Group.
         More than 8 million prescriptions are being filled on average 
through our plans on a monthly basis by duals and non-duals. 
         Eligibility and enrollment issues at the pharmacy are no 
longer a significant issue, as demonstrated by the very low percentage of 
claims transactions not making it through the system due to eligibility or 
enrollment problems.
         Call volumes are down and call wait times are vastly improved 
for both beneficiaries and pharmacists since the start of the benefit and even 
since the beginning of February.
         Enrollment response times from CMS have improved 
considerably.  
                o This means more and more beneficiaries are receiving their 
ID cards before their participation in the program begins.  
                o It also means that even if a beneficiary forgets his or her 
card, complete billing information for their plan is available to pharmacists 
the first time the beneficiary visits the pharmacy.
        These are very significant results, which underscore the fact that the 
Part D benefit is helping to make affordable prescription drug coverage 
available to millions of seniors and disabled individuals, including those who 
previously would not have qualified for assistance through other federal or 
state programs.

How UnitedHealth Group Prepared for Part D
        In preparing for the roll-out of Part D and in responding to the 
initial issues, we invested millions of dollars and hundreds of thousands of 
hours in technological upgrades, consumer outreach and education, enhanced 
pharmacist information and support, and expansion of and training in our call 
centers. 
        In the course of this preparation, we have been in constant 
communication and engaged in intense preparation with CMS, state governments, 
and members of our pharmacy network.  As an example of this preparation, well 
before January, we engaged in a broad national educational campaign about Part 
D.  The goal was to ensure that individuals eligible for the Part D benefit 
would understand their options and know how to access and make full use of the 
new prescription drug benefits available to them under Medicare.  
        As part of this effort, we developed an educational consumer booklet 
known as the Show-Me Guide.  We published the Show-Me Guide in seven different 
languages (English, Spanish, Chinese, Russian, Vietnamese, Korean, and 
Tagalog) and distributed the Guide widely to consumers, providers, advocates, 
and governmental representatives at both the state and federal levels.
        We conducted and participated in hundreds of community events 
nationwide to help people understand Part D.  In doing so, we partnered with 
associations, AARP and other advocacy groups, community organizations, Members 
of Congress, state and federal agencies, retail pharmacies and employer 
customers.  We developed specialized materials and seminars for low-income 
populations, pharmacists and doctors, as well as for constituents of 
organizations such as the National Kidney Foundation, American 
Association of Homes and Services for the Aging, National Association of Chain 
Drugstores and the National Hispanic Medical Association. 
        We also launched two educational websites: 
         www.MedicareRxInfoSource.com, in July; and 
         In November www.PartDCentral.com - to help families and 
caregivers of Medicare beneficiaries.  
And in the months prior to the enrollment period we made our call centers 
available to anyone who wanted information about Part D.
        In another example of our preparatory steps, drawing on our deep 
experience with the Medicare population and much additional analysis, Ovations 
strove to ensure that our formulary was one of the broadest, most open and 
non-restrictive.  Ovations' formulary as we developed it covers 100% of CMS' 
top 100 volume drugs without requiring prior authorization.  It also is one of 
the few formularies to include all 178 Part D covered drugs that the Health 
and Human Services' Inspector General reports as most commonly used by dual 
eligibles.  And, the Ovations formulary contains just 39 drugs with prior 
authorization requirements and five with step therapy requirements.  Again, as 
I said earlier we temporarily suspended these requirements for all but four 
drugs in order to give pharmacists and enrollees ample time to adjust to their 
new Part D plans.
        Under strict guidelines of the Medicare Modernization Act, all plans 
must review prior authorization requests as expeditiously as the enrollee's 
health condition requires, but no later than 72 hours for standard requests.  
In the rare cases where not taking the drugs could be life-threatening or 
raise other clinical concerns, we developed a policy of dispensing a five-day 
supply to ensure patient safety.  Consumers can also request an expedited review, which ensures that their claims are resolved within 24 hours.  
Ovations' practice has always been to only target drugs for prior 
authorization based on the drug's potential for inappropriate use, safety, 
cost, and other similar factors.
        It's also worth mentioning that:
       	 We developed the Ovations formulary based on years of 
experience with senior and complex populations.  As a result, historical data 
suggests that only 0.2% of prescription claims are for drugs that would be 
subject to prior authorization on the Ovations formulary.  Similarly, only 
0.5% of claims would be subject to a step therapy edit based on these 
historical data.
         Ovations does not require prior authorization for common 
drugs such as those for Alzheimer's disease, and the list of drugs for which 
Ovations requires prior authorization is well below the industry average. 
        All of this is important to understanding why, overall, those who 
enrolled in UnitedHealth Group's plans express a high degree of satisfaction.  
We are excited by the positive feedback we have been receiving from our 
enrollees and want to share some of that with you.
        Ultimately, the new Medicare Prescription Drug Benefit is about more 
than any individual plan - it is about the people.
        It is about people who, before Part D, had no access to affordable 
prescription drug coverage.  It is about people like Fran Cooper from Bellvue, 
Nebraska who thought so little of Part D that she wasn't even going to enroll 
in a plan.  In fact, she called our offices just to let us know how much she 
disliked Part D.  We were able to show her how Part D could help her save on 
her prescription drug costs and make sure she was enrolled in time to begin 
realizing those savings on January 1st.  And, like many of our members, 
we were able to guide her through some of the hurdles she encountered in the 
program's opening days. 
        It is about people like Sarah Blackwell from Auxvasse, Missouri who is 
now realizing significant savings on her prescription drug costs thanks to the 
subsidy Part D provides for beneficiaries with lower incomes. 
        And, it also is about people like Georgina Vigilance from Springfield, 
Virginia who values the peace of mind that Part D provides to her and her 
husband.  They take only two prescriptions between them, but know that should 
their health change they will not have to worry that the prescriptions that 
could save their life will be out of their reach.

Still More to Do
        Despite the start-up issues, there is a fair amount of good news to 
talk about with respect to the Part D program.  However, our work to make the 
program succeed for all beneficiaries and, very importantly, to ensure that 
those who need it most are signing up is by no means finished.  We are 
resolute in our commitment to help deliver on this promise for all 
beneficiaries.
        To accomplish this we continue to collaborate with CMS to assist the 
Agency in resolving enrollment and eligibility data issues that are at the 
heart of the early Part D implementation challenges.  
        We are also working with pharmacies directly and through our industry 
trade associations to identify ways to make the transition to Part D easier 
for pharmacists.  For example, as a group, we are currently looking at 
standardizing across all plans the electronic messaging pharmacists receive to 
address Part D-related administrative issues (e.g., when a drug is not covered 
- either because it is a Part D excluded drug or is covered under Medicare 
Part B).
        While the bulk of the enrollment-oriented issues have been addressed - 
or are in the process of being addressed - we are working with states to 
ensure that any remaining issues relating to dual eligibles are resolved.  We 
are placing a particular focus on ways to ensure a smooth transition of duals 
to Part D going forward as they become dually eligible and if and as they switch plans.  
        In addition, we are working with CMS, community organizations, 
associations and others to more effectively managed beneficiaries' 
expectations around enrollment and formulary.  On this note, we appreciate the 
efforts of CMS and Members of Congress to encourage Medicare beneficiaries to 
enroll early in the month and avoid late-month switches in order to ensure 
that their enrollment is completed by the 1st of the following 
month.
        As CMS has intensified its educational outreach across the board, we 
at Ovations are redoubling our outreach efforts to low-income individuals to 
encourage them to apply for subsidies and to join a Part D plan.  For example: 
         We recently launched a new community grassroots outreach 
campaign in ten regions across the country to help educate, inform and enroll 
beneficiaries, especially low-income individuals.  
         Our Evercare division, which serves the frail elderly, 
chronically ill and disabled, is conducting telephone call-in seminars for 
beneficiaries who find it hard to get around and busy adult caregivers.  The 
first event will focus on Medicare Part D and give participants the 
opportunity to ask frank questions and gather unbiased 
information from a panel of representatives from local and national health 
organizations.  It will be held on March 10th for participants in Boston and 
Worcester, Massachusetts and the Houston and Harris County areas in Texas.
        We intend to expand these targeted beneficiary education efforts in 
the coming months and are working with CMS and community-based groups to do 
so.  Since last summer, we have worked with members of the Congressional Black 
Caucus to reach out to Medicare beneficiaries in the communities they 
represent.  We recently met with leaders of the CBC to discuss ways in which 
we can intensify this outreach.  We also are following-up with those 
organizations who requested copies of the Show-Me Guide for their members, 
employees, clients or constituents to offer additional educational 
assistance.  Ten million of those guides were distributed in the course of our 
education campaign. 
        We would encourage others to do the same. The importance of helping 
lower-income populations ineligible for Medicaid in particular understand the 
value of enrolling, of clarifying their misperceptions and questions and of 
removing barriers for them cannot be underestimated.  There are an estimated 
six to eight million low-income people who should qualify for subsidies under 
Part D but are not eligible for Medicaid.  These are people, who likely have 
no prescription drug coverage and can, for the first time, save significantly 
over the retail price for their medication.  As noted, almost half of 
Ovations' members are low-income individuals who may not have had any 
prescription drug coverage previously.
	As we emphasize the importance of encouraging low-income individuals 
to apply for subsidies and enroll in Part D, we also want to recognize the 
important work State Health Insurance Assistance Programs (SHIPs) play in this 
regard.  Consequently, we would encourage you to consider increasing the 
funding made available to support these organizations so that they can help 
ensure that beneficiaries - especially low-income individuals - are able to 
easily access the Part D program.

Conclusion
        In conclusion, I would like to say that we believe the Medicare 
prescription drug program is working for the vast majority of beneficiaries.  
Enrollees in UnitedHealth Group/Ovation's Medicare Part D plans are realizing 
significant savings and report a high degree of satisfaction. And the program 
overall, as CMS has reported, is delivering access to medications for most 
beneficiaries and saving them millions of dollars as a 
group.
        Clearly, we should and are doing all we can to ensure that Part D is 
working for all enrollees especially those for whom the transition to Part D 
has been difficult.  At the same time, we should recognize that a great number 
of people are working assiduously to continue to improve Part D's implementation.  Significant progress has been made on this 
front with CMS, states and health plans working to close the information gaps 
in the system that were at the heart of the program's early implementation 
challenges.  I want to stress again that we continue to see improvements in 
the system.  As a sign of these improvements, over the last half of February, 
we continued to see decreases in both call volumes and call wait times.  
Voluntary enrollment is up sharply - as CMS announced last week.  And this is 
consistent with the trends at Ovations and UnitedHealth Group.
        We are encouraged by this progress.  We at Ovations and UnitedHealth 
Group are committed to working with you, CMS, the states, pharmacists and 
beneficiaries to address the current challenges and fulfill the promise of 
what is an ambitious and valuable program.  We hope that we can be a 
constructive force to that end and look forward to working with you in the 
weeks, months and years to come.  We especially appreciate the Committee's 
leadership on this important matter and thank you for the opportunity to share 
our thoughts.  I would be happy to answer any questions you might 
have for me.

	MR. DEAL.  Thank you, Mr. Paul.  Ms. Walsh.
MS. WALSH.  Chairman Deal, members of the committee, it is an 
honor to be here today to speak with you about Maine's experience with 
the implementation of the Medicare drug benefit.  My name is Jude 
Walsh and I serve as the Director of Pharmacy Affairs in Maine and 
overall responsibility for the implementation of the Medicare benefit in 
my State.  I would like to begin with some background on Maine, our 
experience with the implementation of the Part D benefit, and our 
remaining concerns.
	There are approximately 45,000 dual eligible individuals enrolled in 
the MaineCare Program, Maine's Medicaid program.  Maine, like many 
other States, has invested a tremendous amount of time and effort to 
prepare for the safe transfer of its duals to Part D.  Part of this 
preparation included an analysis of the formularies of all the prescription 
drug plans available to our duals.  This analysis showed that one out of 
every four dual members had been randomly assigned to plans where 
less than 60 percent of their drugs were covered and available without 
prior authorization.  We sought and gained permission from CMS to 
intelligently reassign these members to plans that covered 95 percent of 
their drugs.
	Maine's preparation included working closely with our pharmacists.  
They alerted us to a potential major problem in late December.  They 
were concerned that they could not verify Part D eligibility for 40 to 50 
percent of their dual clients.  This meant that they would not be able to 
get the plan to pay for the members' prescriptions.  In addition, we had 
received our MMA file, that is the Medicare file that we get from CMS, 
the file that identifies the duals, and this file showed that only four 
people out of the 45,000 who are on the file were eligible for low-income 
subsidies, when in fact, all 45,000 people should have been, had the 
subsidy available to them.  These issues prompted our Governor to draft 
an urgent letter to Dr. McClellan.
	We also set up a toll free hotline that low-income seniors could call 
for information about Part D, assisted them with enrollments into plans 
and helped people apply for low-income subsidies.  The last week of 
December, we were averaging 15,000 calls a day from confused seniors.  
This call volume was very difficult to manage for a State of Maine's size.  
This hotline enabled us to quickly respond during the first few days of 
January, when thousands of Maine's seniors were not able to access their 
Federal drug benefit.  State staff were monitoring phone lines over the 
New Year's holiday weekend.  On New Year's Day we immediately 
began hearing about problems.  We tried contacting plans and some were 
closed or did not answer their phones.  Pharmacists were put on hold an 
hour or more and at one point, our largest independent pharmacy had all 
13 outgoing lines on hold with plans.
	By Tuesday, January 3rd we were up to 18,000 calls from people who 
could not get their medications.  Some members were being charged a 
$250 deductible and over $100 in co-pays.  Many were leaving 
pharmacies without life sustaining medications.  It was chaos, people 
were calling nonstop.  Many people could not get their medicine.  They 
were crying and they had nowhere else to turn.  The State had to act and 
at 11:30 in the morning on the 3rd, the Governor had heard enough.  He 
instructed us, and I think Maine was the first State in the country, to 
restore our pharmacy benefit for these people.
	We created an emergency override for pharmacists to bill the State 
when duals were being charged excessive co-pays or were being denied 
transition coverage of drugs.  This also allowed pharmacies to bill us 
when nursing homes duals were denied injectable medications like 
insulin and cancer medications.  To date, we have filled over 115,000 
prescriptions for over 50,000 people using this override.  We continue to 
provide and need this safety net.  We still have more than 12 percent of 
our members missing their low-income subsidy indicators.  We have 
spent over $6 million and have asked for an extension to continue this 
critically needed safety net through the end of March.
	We would like to acknowledge the valiant efforts of CMS staff to 
work with us, both over the phone and in person, to address our 
concerns.  We have seen improvements since the benefit began.  Many 
more people now have the correct low-income subsidy indicators on their 
MMA file.  We have benefited from their sound advice on working with 
pharmacies to make sure that Part D plans are billed prior to using this 
override in billing the State.  We appreciate the opportunity to apply for 
the Medicare demonstration waiver and the promise of repayment from 
CMS.
	There are, however, issues with the Medicare Part D benefit that 
persist, especially for the dual eligible population.  The disparities 
between the plans and the number of plans to choose from are confusing 
with dual eligibles often auto-assigned into plans where drug formularies 
do not match their drug needs.  They have mandatory co-pays.  In fact, 
we have heard that some pharmacies have denied filling medications for 
failure to pay co-pays.  This Federal flaw has resulted in legislation 
pending in Maine that would provide additional co-pay assistance to our 
duals.
	Their drug benefit is now divided even further with some 
medications covered by Medicaid in the form of excluded drugs, some 
covered by Medicare Part B, like cancer medications, and the remaining 
drugs covered by Part D, none of which is held in a single drug profile, 
creating increased opportunities for the occurrence of adverse events, 
drug-to-drug interactions and duplicate therapy.  Prior authorization 
criteria vary from plan to plan, fair hearing requests take a minimum of 
17 days, transitional coverage is inconsistently applied depending on the 
plan, and enrollments average six to eight weeks and it is difficult to 
administer when members want to move to a new plan.
	Maine is also adversely impacted by the clawback.  Even with the 
Secretary's recent reduction in the clawback amount, we are still being 
charged millions of additional dollars for a benefit we had no role in 
designing and whose current and future cost we have no influence in 
controlling.  The clawback is, perhaps, the most accurately named and 
least confusing aspect of the Medicare drug benefit.  It uniformly 
punishes States for effectively controlling prescription drug costs, while 
rewarding States that have suffered annual double digit increases due to 
inaction.
	For the next three years CMS will be using a national trend rate on 
prescription drug growth of over 9 percent, when in fact, Maine has been 
containing annual drug growth to less than 3 percent.  The Federal drug 
benefit was not ready January 1st and it is still not ready for everyone 
today.  We doubt that CMS would have ever allowed a State Medicaid 
program to implement a benefit as flawed as this one remains.  We 
appreciate the enormity of the task before CMS, but urge Congress to act 
and fix the Part D benefit, including changing the base year for the 
calculation of the clawback and using actual State trend rates instead of 
National projections.  I thank you for the opportunity to testify and will 
be available for questions.
	[The prepared statement of Jude Walsh follows:]

PREPARED STATEMENT OF JUDE E. WALSH, SPECIAL ASSISTANT, GOVERNOR'S OFFICE OF 
HEALTH POLICY AND FINANCE, STATE OF MAINE

        Chairman Deal, Representatives Brown, Dingell, Barton, and members of 
the Committee:
        It is an honor to be here today to speak with you about Maine's 
experience with the implementation of the Medicare Drug Benefit.  My name is 
Jude Walsh and I serve as the Director of Pharmacy Affairs in Maine and have 
overall responsibility for the implementation of the Medicare Drug Benefit in 
my state.  
	I would like to begin with some background on Maine, our experience 
with the implementation of the Part D benefit and our remaining concerns. 
There are approximately 45,000 dual eligible individuals enrolled in the MaineCare Program - Maine's Medicaid Program.   Maine, like many other states, 
has invested a tremendous amount of time and effort to prepare for the safe 
transfer of its duals to Part D.  Part of this preparation included an 
analysis of the formularies of all the Prescription Drug Plans 
available to our duals.  The analysis showed that 1 out of every 4 dual 
members had been assigned to plans where less than 60% of their drugs were 
covered and available without prior authorization.  We sought and gained 
permission from CMS to intelligently reassign these members to plans that 
covered over 95% of their drugs.
	This preparation included working closely with our pharmacists.  They 
alerted us to a potential major problem in late December.  They were concerned 
that they could not verify Part D eligibility for 40-50% of their dual 
clients.  This means that they would not be able to get the plan to pay for 
that members' prescriptions.  In addition, we had received our MMA file - the 
file identifying duals from CMS- that had only 4 people eligible for low-
income subsidies when all 45,000 duals should have had  this subsidy 
available to them.  These issues prompted the Governor to draft an urgent 
letter to Dr. McClellan.
        We also set up a toll free hotline where low-income seniors could call 
for information about Part D, assisted with enrollment into plans and helped 
people apply for Low Income Subsidies.  The last week of December we were 
averaging about 15,000 calls a day from confused seniors.  This call volume 
was very difficult to manage for a state of Maine's size.    This hotline 
enabled us to respond quickly during the first few days of January when 
thousands of Maine seniors were not able to access their Federal 
drug benefit.
	State staff were monitoring phone lines over the New Year's holiday 
weekend. On New Year's Day we immediately began hearing about problems.  We 
tried contacting plans and some were closed or did not answer their phones.  
Pharmacists were put on hold an hour or more - and at one point our largest 
independent pharmacy had all 13 outgoing lines on hold with plans.
	By Tuesday January 3rd we were up to 18,000 calls from people who 
could not get their medications.  In some cases they were being charged a $250 
deductible and over a $100 in co pays.  Many were leaving pharmacies without 
life sustaining medications.  It was chaos.  	People were calling non-stop.  
Nobody could get their medicine.   They were crying and they had no place else 
to turn.  The State had to act.  At 11:30 am Tuesday morning the Governor had 
heard enough.  He instructed me to restore our pharmacy benefit for these people.
	We created an emergency override for pharmacists to bill the State 
when Duals were being charged excessive co pays or being denied transition 
coverage.  This also allowed the pharmacies to bill us when nursing home duals 
were denied injectable drugs like insulin and cancer medication.
        To date we have filled over 115,000 prescriptions for over 50,000 
people using this override.  We continue to need this safety net.  We still 
have more than 12% of our members without Low Income Subsidy indicators 
working.  We have spent over $6 Million dollars and have asked for an 
extension to continue this critically needed safety net through the end of 
March.
        There are issues with the Part D benefit that persist, especially for 
the dual eligible population.  The number and choices of plans is confusing 
with duals often auto-assigned into plans with drug formularies not matching 
their drug needs.  They have mandatory co pays - in fact we have heard that 
some pharmacies have denied filling medications for failure to pay co pays.  
This federal flaw has resulted in legislation pending in Maine that 
would provide additional co pay assistance. The drug benefit is divided with 
some medications covered by Medicaid (excluded drugs), some covered by 
Medicare Part B (cancer medications) and the remaining drugs covered by Part D 
- none of which is held in a single drug profile, creating the opportunity for 
drug to drug interactions and duplicate therapy to occur. Prior Authorization 
criteria vary from plan to plan, fair hearings requests take a minimum of 17 
days, transitional coverage is inconsistently applied depending on the plan 
and enrollment averages 6 -8 weeks and is difficult to administer when members 
attempt to move to a new plan. 
        We would like to acknowledge the valiant efforts of CMS staff to work 
with us to address these concerns.  We have seen improvements since the 
benefit began.  We have taken their advice on working with pharmacies to make 
sure that Part D plans are billed prior to using our override and billing the 
State.  We appreciate the opportunity to apply for the Medicare demonstration 
waiver and the promise of repayment.
        Maine is adversely impacted by the clawback.  Even with the 
Secretary's recent reduction in the clawback amount we still are being charged 
millions of additional dollars for a benefit we had no role in designing and 
whose current and future costs we have no influence in controlling.  The 
clawback is perhaps the most accurately named and least confusing aspect of 
Medicare Drug benefit. It uniformly punishes states for effectively 
controlling prescription drug costs while rewarding states that had annual 
double-digit increases due to inaction.  For the next three years CMS will be 
using a national trend rate on prescription drug growth of over 9% when in 
fact, Maine has been containing growth to less than 3%.
        The federal drug benefit was not ready January 1st and is still not 
ready for everyone today.  CMS would never have allowed a state Medicaid 
Program to implement a benefit as flawed as this one remains.  We appreciate 
the enormity of the task before CMS but urge Congress to act and fix the Part 
D benefit including changing the base year for calculation of the clawback an 
using actual trend rates instead of projections.
        Thank you for the opportunity to testify.  I would be happy to answer 
any questions you might have.

	MR. DEAL.  Thank you.  Mr. Ettienne.
        MR. ETTIENNE.  Good job.  Thank you.  Mr. Chairman, Mr. Allen, 
and other members who are present today.  My name is Earl Ettienne.  I 
am a registered pharmacist and the Senior Pharmacy Supervisor for CVS 
Pharmacy.  I am pleased to appear before you today to provide my 
perspectives, as well as that of CVS Pharmacy on the current status of 
the implementation of the Medicare Part D prescription drug benefit.  
CVS is, indeed, the largest pharmacy provider in the nation with over 
5,500 stores in 36 States.  Last year we filled in excess of 400 million 
prescriptions and had annual sales in excess of $37 billion.  In my role as 
the Senior Pharmacy Supervisor I am responsible for overseeing the 
operations of all CVS pharmacies in the Washington metropolitan area.  
For example, I am responsible for assuring that all these pharmacies and 
the pharmacists that practice in these stores abide by the highest 
standards of professional practice, comply with Federal and State 
regulations relating to the practice of pharmacy, and are aware of 
important changes in prescription drug benefit programs such as 
Medicare Part D.
	Without a doubt, the implementation of Medicare Part D created 
many challenges for CVS Pharmacy, the millions of beneficiaries that 
obtain prescriptions from our pharmacies, as well as the many thousands 
of pharmacists that practice in our stores.  However, as a large pharmacy 
provider, we knew that it was very important to do all that we could to 
make this benefit work for the patients and for the pharmacists that we 
serve.  Our pharmacists have spent countless hours helping seniors better 
understand the new Medicare Part D drug benefit.  They spend time 
educating them about their various plan options, as well as obtaining the 
information necessary to accurately fill and bill their prescriptions.  
Seniors rely on their pharmacists, whether they go to an independent 
pharmacy or to a chain pharmacy, to help them with all these tasks.
	To that end, I would agree with Secretary Leavitt's characterization 
recently that said the pharmacists are, indeed, the heroes during the early 
stages of this implementation.  I noted today that there were several 
members who also echo those same sentiments.  No doubt that the 
beginning of the Medicare Part D program was rough primarily because 
pharmacies lacked important beneficiary billing information and co-pay 
data on many Medicare beneficiaries that had enrolled or had been 
assigned to a Part D plan.  This is because many beneficiaries have not 
received the data from the plans in which they had been enrolled, nor did 
the pharmacies have access to this information through the E1 query 
eligibility system early in the program.
	Unfortunately, the long initial wait times for the various plans, the 
help lines necessary to obtain the necessary billing information slowed 
down the prescription filling process for our pharmacists.  These long 
waits also increased the amount of time that a Medicare beneficiary had 
to wait to get their prescription filled.  We know that this was particularly 
a problem for the dual eligibles that were transferred from Medicaid drug 
coverage to Medicare Part D coverage.  However, the wait times have 
significantly lessened and our pharmacists continue to ensure that 
beneficiaries are provided their necessary medications.
	We hope that many of the initial system start-up problems are 
resolved.  We do remain hopeful but concerned about the significant 
number of individuals that might enroll just before the May 15th open 
enrollment period deadline.  Although, since there is a gap of time 
between the May 15th deadline and the June 1st enrollment effective date, 
we are hopeful that the health plans will have time to be sure that all the 
necessary information will be populated in their data fields and members 
will have received ID cards and benefit information.  I will have more to 
say about this just a little later.  I also know that many pharmacists found 
some Part D plans' transition policies to be hard to understand and 
difficult to implement.  We are working through some of these issues 
with CMS and the health plans, but more work needs to be done in that 
area.
	At this point, I can say that, based on the feedback that I am 
receiving from the front line, from the pharmacists, the situation with 
Medicare Part D is clearly better as compared to days early in the 
program.  There still remains several systematic and day-to-day issues 
that pharmacists have to deal with and there may be new challenges on 
the horizon.  For example, we still believe that Congress and HHS must 
somehow address the enrollment lag issue and we are very concerned 
about how Medicare beneficiaries will react when they find themselves 
in the coverage gap or the donut hole this summer.  We also believe that 
there could be a significant log jam at the end of March, which is the end 
of the special 90-day transition period.
	 Millions of beneficiaries will need to either seek an exception in 
order to continue on non-formulary drugs that they are taking, or have 
their non-formulary medication switched to a formulary drug.  This 
could create significant problems for physicians, for pharmacists that are 
trying to assure that the beneficiaries remain on medications that are 
appropriate to treat their medical conditions.  We are helping our 
pharmacists better understand the exceptions and appeals process so they 
can explain it to the Medicare beneficiary, if asked.  Plans need to begin 
to address these transition issues now before the last week of the month.
	Let me talk just briefly about education and training.  There have 
been many questions in the press about whether pharmacists were 
adequately educated and prepared for the many aspects of the Part D 
implementation and whether CMS did all that it could to help 
pharmacists prepare.  In my view, we embraced this task to educate 
almost 15,000 plus pharmacists and over 35,000 support personnel 
before October 1st about all aspects of Part D, as well as keep them 
informed of the many changes that have occurred since then.  
Fortunately, we started the process last June through multiple education 
modules.  We built on the information learned in prior continuing 
education programs so that our pharmacists felt comfortable that they 
knew what was needed to support our Medicare Part D eligible 
customers.
	Moreover, not all pharmacies have the same technological 
capabilities in their pharmacy computer systems.  This may have made it 
easier for some pharmacies than others to use some of the new 
technology tools that have been put in place to facilitate the 
implementation of this benefit.  Let me just briefly describe for you some 
of the many activities that CVS Pharmacy designed to help the 
pharmacists understand Part D and stay updated on the many changes 
that have taken place since the start of the program.
	We have sponsored multiple continuing education events for our 
pharmacists on Part D.  These included special online, as well as live 
training sessions that began last June.  Every pharmacist had to complete 
three training sessions online and we carefully tracked each session.  We 
developed an internal intranet website that is updated regularly with new 
information about the Part D benefit as it becomes available.  We have 
weekly calls to review new updates relating to the Part D benefit in 
general, as well as specific issues that pharmacists need to know about 
certain Part D plans.
	New information is coming out every day, from CMS, the States, 
and from the plans.  It is important for our pharmacists to keep up to date 
but frankly, it can be challenging to do so.  In my view, pharmacists 
understand their important obligation to their patients and are doing the 
best they can to keep up with this information overload.  CVS also 
understands its important corporate role in helping our pharmacists serve 
Medicare beneficiaries by offering them a structured way to keep on top 
of these changes.
	There will be some challenges moving forward.  We expect 
challenges with the enrollment logs, formulary issues, as well as billing 
issues.  In the interest of time, my written testimony will cover these in 
great detail.  In conclusion, we have obviously come a long way since 
January 1st, but we have opportunities to make improvements.  CVS 
Pharmacy is committed to doing all it can to making this benefit work 
through education of our pharmacists, outreach to seniors, and 
participation in various government and private sector initiatives to 
create efficiencies in the delivery of this benefit.  We appreciate the 
opportunity to provide our views to the subcommittee and we stand 
ready and willing to help people live longer, healthier, happier lives.  
Thank you.
	[The prepared statement of Earl Ettienne follows:]

PREPARED STATEMENT OF EARL ETTIENNE, SENIOR RX SUPERVISOR, CVS PHARMACY

        Mr. Chairman and Members of the Subcommittee on Health: I am Earl Ettienne, a 
registered pharmacist and Senior Pharmacy Supervisor for CVS Pharmacy.  I am pleased 
to appear before you today to provide my perspectives and that of CVS Pharmacy on the 
current status of the implementation of the Medicare Part D prescription drug benefit 
program.
        CVS Pharmacy is the largest pharmacy provider in the nation with over 5,500 stores 
in 36 states.  Last year, we filled over 400 million prescriptions and had annual sales of 
$37 billion.  In my role as Senior Pharmacy Supervisor, I am responsible for overseeing 
the operations of all CVS pharmacies in the Washington, D.C. metropolitan area.  For 
example, I am responsible for assuring that all these pharmacies - and the pharmacists 
that practice in these stores - abide by the highest standards of professional practice, 
comply with Federal and state regulations relating to the practice of pharmacy, and are 
aware of important changes in prescription drug benefit programs, such as Medicare Part 
D. 

Medicare Part D: Past and Present
        Without a doubt, implementation of Part D created many challenges for CVS 
Pharmacy, the millions of beneficiaries that obtain prescriptions from our pharmacies, as 
well as the many thousands of pharmacists that practice in our stores.  However, as a 
large pharmacy provider, we knew that it was important to do all we could to make the 
benefit work for the patients our pharmacists serve. 
        Our pharmacists have spent countless hours helping seniors better understand the 
new Medicare Part D drug benefit, educate them about their various plan options, and 
obtain the information necessary to accurately fill and bill their prescriptions. Seniors rely 
on their pharmacist - whether they go to an independent or chain pharmacy - to help 
them with all these tasks.  To that end, I would agree with Secretary Leavitt's recent 
characterization of pharmacists as being the "heroes" of the early stages of the 
implementation of this benefit. 
        No doubt that the beginning of Medicare Part D was rough primarily because 
pharmacies lacked important beneficiary billing information and copay data on many 
Medicare beneficiaries that had enrolled or been assigned to a Part D plan.  That is 
because many beneficiaries had not received these data from the plans in which they had 
been enrolled, nor did pharmacies have access to this information through the "E1 query" 
eligibility system early on in the program. 
        Unfortunately, the long initial "wait times" for the various plans' "help lines" to 
obtain the necessary billing information slowed down the prescription filling process for 
the pharmacist.  These long waits also increased the amount of time that a Medicare 
beneficiary had to wait to get their prescription filled.  We know that this was particularly 
a problem for the dual eligibles that were transferred from Medicaid drug coverage to 
Medicare Part D coverage.  However, the wait times have since significantly lessened 
and our pharmacists are continuing to ensure that beneficiaries are provided their 
necessary medications.  
        We hope that many of the initial system start up problems are resolved.  We do 
remain hopeful but concerned about the significant number of individuals that might 
enroll just before the May 15th "open enrollment period" deadline.  Although, since there 
is a gap of time between the May 15th deadline and June 1st enrollment effective date, we 
are hopeful that the health plans will have time to be sure that all the necessary 
information will be populated in their data fields and members will have received their ID 
cards and benefit information.  I will have more to say about that a little later.  I also 
know that many pharmacists found some Part D plans' transition policies to be hard to 
understand and difficult to implement.  We are working through some of those issues 
with CMS and the health plans, but more work needs to be done in that area.
        At this point, I can say that based on the feedback that I am receiving from 
pharmacists on the front line in our pharmacies, the situation with Medicare Part D is 
clearly better as compared to the early days of the program.  There still remain several 
systemic and day-to-day issues that pharmacists have to deal with, and there may be new 
challenges on the horizon. 
        For example, we still believe that Congress and HHS must somehow address the 
"enrollment lag" issue, and we are very concerned about how Medicare beneficiaries will 
react when they find themselves in the "coverage gap" or "donut hole" this summer.  We 
also believe that there could be a significant "logjam" at the end of March, which is the 
end of the special 90-day transition period.  Millions of beneficiaries will need to either 
seek an exception in order to continue on the non-formulary drug that they are taking, or 
have their non-formulary medication switched to a formulary drug.  This could create 
significant problems for physicians and pharmacists that are trying to assure that 
beneficiaries remain on medications that are appropriate to treat their medical conditions. 
        We are helping our pharmacists better understand the exceptions and appeals 
process so that they can explain it to a Medicare beneficiary if asked.  Plans need to begin 
to address these transition issues now before the last week of this month. 

Education and Training of Pharmacists 
        There have been many questions in the press about whether pharmacists were 
adequately educated and prepared for the many aspects of Part D implementation, and 
whether the Centers for Medicare and Medicaid Services (CMS) did all it could to help 
pharmacists prepare.  In my view, we embraced this task to educate almost 15,000 plus 
CVS pharmacists and over 35,000 pharmacy support personnel before October 1st about 
all aspects of Part D, as well as keep them informed of the many changes that have 
occurred since then.  
        Fortunately, we started this process last June and through multiple educational 
modules. We built on the information learned in prior continuing education programs so 
that our pharmacists felt comfortable that they knew what was needed to support our 
Medicare Part D eligible customers.  Moreover, not all pharmacies have the same 
technological capabilities in their pharmacy computer systems.  This may have made it 
easier for some pharmacies than others to use some of the new technology tools that have 
been put in place to facilitate the implementation of the benefit. 
        Let me describe for you some of the many activities that CVS Pharmacy designed to 
help our pharmacists understand Part D, and stay updated on the many changes that have 
taken place since the start of the program: 
         CVS sponsored multiple continuing education events for our pharmacists on 
Medicare Part D. These included special online and live training sessions that 
began last June. Every pharmacist had to complete three training sessions 
online, which was carefully checked and tracked;
         We developed an internal intranet website that is updated regularly with new 
information about the Part D benefit as it becomes available; 
         We have weekly calls to review new updates relating to the Part D benefit in 
general, as well as specific issues that pharmacists need to know about certain 
Part D plans.
        New information is coming out every day both from CMS, states, and the plans.  It 
is important for our pharmacists to keep up to date, but frankly it can be challenging to do 
so.  In my view, pharmacists understand their important obligations to their patients and 
are doing the best they can to keep on top of this "information overload."  CVS also 
understands its' important corporate role in helping our pharmacists serve Medicare 
beneficiaries by offering them a structured way to keep on top of these changes. 

Challenges Moving Forward with Part D 

	Let me touch briefly on some of the challenges that remain with Medicare Part D 
implementation.  I have already alluded to some of these in my previous remarks, but will 
expand on them here:
         Enrollment Lag:  Congress and the Administration should address this 
"enrollment lag" issue by setting benchmarks that are easily understood.  The 
key is to insure that the enrollment information and subsidy approval process 
must be completed and the results populated into the pharmacy databases. 

	Additionally, the patient needs to have received their ID card and benefit 
information.  With that as the guiding principle, you may want to consider a 30-
day enrollment processing window. However, if plans can complete the process 
faster than that, then eligibility would become effective sooner. We suggest that 
CMS publish the time it takes on average for health plans to complete the process 
above, and let customers use that as a factor in choosing between health plans.  
By doing that, I think you will see the marketplace adopt more improved 
processes.  But more importantly, the customer will experience a positive service 
encounter.

         Formulary Issues:  As you know, each Part D plan has a different drug 
formulary, with different cost sharing tiers as well as different drugs covered 
under each tier.  Many plans are also using cost and utilization management tools 
such as prior authorization and step therapy for these formulary drugs.  Plans can 
also change formulary drugs with 60 days written notice. Some drugs are 
covered both under Medicare Part B and Medicare Part D, depending on how 
they are administered or used.  Each plan has a different transition policy. 

	Keeping current on all this information, as well as staying up to date on any 
changes, can be challenging for physicians, pharmacists, and the beneficiaries.  
While pharmacies have adapted to dealing with the administrative burdens of 
third party prescription plans, we think that these issues will significantly 
multiply under Part D programs.  Administration of these Part D formularies at 
the pharmacy counter will increase costs for pharmacists and slow down the 
filling of prescriptions. 

        We are trying to resolve some of these issues by working with the health plans to 
develop "standard electronic real time messages" that will be sent back to the 
pharmacists from the plans.  These messages will give more information to the 
pharmacist that will help reduce the amount of time that pharmacists may have to 
spend in resolving these formulary-related issues. 

        It would also help tremendously if plans would work directly with beneficiaries 
that need to be moved from a non formulary drug to a formulary drug before that 
beneficiary returns to the pharmacy counter.  This will allow the pharmacist to 
spend more time talking to their patients about appropriate use of their drug 
therapy, rather than resolving third party administrative problems.  

        Billing Issues:  If the pharmacist does not have accurate billing information, the 
pharmacist cannot bill the appropriate Part D plan or charge the appropriate 
copay.  This situation occurred many times during the early days of the program, 
and still presents a problem for the pharmacist as a result of beneficiaries who are 
"late enrollers" or "late switchers."  Accurate and up to date billing data are the 
life blood of the pharmacy billing systems.  However, if we can address the 
"enrollment lag" issues I mentioned earlier, this could eliminate many of our 
"billing" concerns.   If not corrected, we will continue to have issues with "late 
enrollers" and "late switchers."  

        Moreover, we face continued economic risk from prescriptions that have been 
billed in good faith to the Wellpoint POS system.  This system was put in place 
to be a "back stop" plan for dual eligibles who had not been auto assigned to a 
Part D plan.  There was some confusion during the early stages of the program 
due to a lack of good billing information for the dual eligibles.  We are now 
being told that many of these POS claims may have to be reversed and then 
rebilled by the pharmacy to another Part D plan or to the Medicaid program.  
This just adds another level of complexity, increases our cost to fill Medicare 
Part D prescriptions, and potentially puts pharmacies at more economic risk.

Conclusion
        We have obviously come a long way Since January 1st, but we have opportunities to 
make improvements.  CVS Pharmacy is committed to doing all it can to making this 
benefit work through education of our pharmacists, outreach to seniors, and participation 
in various government and private-sector initiatives to create efficiencies in delivery of 
the benefit.  We appreciate the opportunity to provide our views to the Subcommittee.  
Thank you.

	MR. DEAL.  Thank you.  Mr. Lipshutz.
        MR. LIPSHULTZ.  Good evening, Mr. Chairman, committee 
members.  Thank you for giving me the opportunity to testify today.  My 
name is David Lipshutz and I am a Staff Attorney at California Health 
Advocates, which is an independent, nonprofit agency that is dedicated 
to education and advocacy on behalf of Medicare beneficiaries.  We do 
this in part by providing technical assistance and training to the network 
of local State Health Insurance Programs, or SHIPs, in California known 
as HICAP, Health Insurance Counseling and Advocacy Program.  Our 
experience with the implementation of Medicare Part D is based on large 
part with our close work with the HICAPs and other consumer assistance 
programs who are on the front line assisting Medicare beneficiaries.
	While there are clearly Part D success stories among those that 
previously did not have coverage, especially if they qualify for the low-
income subsidy, my focus will be on some of the ongoing problems 
many beneficiaries are facing, including problems that won't go away 
without serious changes to the programs.  The most severe problems 
during the implementation of Part D have been felt by those who are 
dually eligible for Medicare and Medicaid, all of whom were switched to 
a new type of coverage in one day.  Many have gone without their 
prescription drugs or have had to pay out of pocket.
	Without States intervening to provide temporary emergency 
coverage, the crisis would be much worse.  In California we have 
approximately one million dual eligibles.  As of about last Thursday, the 
State of California had paid for over 300,000 prescription drugs for over 
170,000 individuals.  From what we have seen so far in California and 
we believe elsewhere, dual eligibles are worse off under Medicare Part D 
due to several reasons.  In part, due to the breadth of the coverage, 
protections, and appeals, and new out-of-pocket costs that are simply out 
of their reach.
	Linda, a client of the Health Consumer Alliance Program in San 
Diego, is a typical example.  She is a dual eligible earning $842 a month.  
She takes about 30 medications.  She says she cannot afford the co-pays 
and will be out of money for food by the end of the month.  Many 
ongoing problems faced by dual eligibles, as I will briefly outline, impact 
all Medicare beneficiaries.
	The first challenge for any beneficiary is trying to understand and 
use the complex new Part D benefit.  The analysis of whether or not to 
enroll in a particular plan does not end at whether a drug is covered; a 
beneficiary must find out at what cost.  The tier placement of a drug can 
mean the difference in paying a set co-pay of a few dollars per month or 
a large percentage for a very costly drug.  Utilization management tools 
that are applied to covered drugs, such as prior authorization, may bring 
down plan costs, but they also serve as a barrier to getting drugs.
	At best, information regarding utilization management is difficult to 
obtain from the plans.  We have seen utilization management used in 
very restrictive ways, effectively denying medications for enrollees, 
including medications that people have already been stabilized on.  I 
would like to put forth the example of Mr. H., a 23 year old Medicare 
beneficiary in El Dorado County who was stabilized on an anti-psychotic 
drug prior to joining the Part D plan in January.  Although his new plan 
covered his drug, as it is amongst one of the required categories, the plan 
did not allow for the amount and quantity prescribed by his treating 
psychiatrist.  Mr. H's family contacted his plan in early January and his 
psychiatrist wrote two separate requests to the plan to cover his drug in 
the requested dosage amount.  The local HICAP program later 
intervened toward the end of the month, a plan representative explained 
that the plan had not responded because the physician had not used the 
correct form.  Mr. H. changed plans in February.
	Information about transition plans, which are meant to give a first fill 
of non-formulary drugs to new enrollees, has also been difficult to obtain 
and to access.  Enrollees who are able to get their transition supply are 
not getting the notices they need to take directions and to take the next 
affirmative steps.  This will be an ongoing issue as people either become 
newly eligible for Part D or change plans and find that their plans do not 
cover the drugs that they need.  California is a culturally rich and diverse 
State.  Non-English speaking beneficiaries are not being well served by 
Part D plans in California.  One of our staff members in Sacramento who 
helped over 300 Spanish speaking Medicare beneficiaries in the last few 
months listened as her clients explained that their plans either have no or 
limited bilingual staff or had a Spanish language voice mail where 
messages were left but unreturned for weeks.  Problems, of course, are 
worse for people who speak languages other than Spanish.
	Some rural counties in northern California have only one local 
pharmacy that contracts with only one Part D plan, one that is about the 
benchmark for dual eligibles and others with the low-income subsidy.  
Plans have a wide discretion in how they design their exceptions process 
including the form of request and the level and type of medical evidence 
a supporting physician must provide.  Many doctors whose participation 
is critical for beneficiaries report that they do not want to participate in 
this process because it is too burdensome for them.
	In addition to these ongoing issues, we are not out of the woods yet.  
There is a pending crisis once State emergency drug coverage runs out 
for dual eligibles and when those who have been able to access transition 
first fills find that their drugs are not covered.  This will be felt most, 
perhaps, by Part D enrollees who will be locked into their plans.  
Medicare beneficiaries deserve a prescription drug benefit they can 
understand and easily access.  While some individuals are successfully 
getting their prescriptions filled, many problems encountered by Part D 
enrollees will not go away without further attention and intervention.  
Thank you for the opportunity to provide these comments.
	[The prepared statement of David Lipshutz follows:]

PREPARED STATEMENT OF DAVID A. LIPSHUTZ, STAFF ATTORNEY, CALIFORNIA HEALTH 
ADVOCATES
I.  INTRODUCTION
        California Health Advocates (CHA) is an independent, non-profit organization 
dedicated to education and advocacy efforts on behalf of Medicare beneficiaries in 
California.  Separate and apart from the State Health Insurance Program (SHIP), we do 
this in part by providing support, including technical assistance and training, to the 
network of California's Health Insurance Counseling and Advocacy 
Programs (HICAPs) with which the SHIP contracts to assist California's Medicare 
beneficiaries and their families.  CHA also provides statewide technical training and 
support to social and legal services agencies and other professionals helping Californians 
with questions about Medicare.  Our experience with the implementation of Medicare 
Part D is based in large part on our close work with the HICAPs and other consumer 
assistance programs that are on the front line assisting Medicare beneficiaries.
        It is clear that the new Part D prescription drug benefit can provide needed 
prescription drug coverage for those who previously had none, and individuals eligible 
for the low-income subsidy (LIS) will receive the new benefit at very little cost.  But the 
first two months of the program demonstrates many of the structural defects in the design 
of the new program that relies solely on commercial companies to provide the new 
benefit in widely varying ways.  By Secretary Leavitt's own admission, the roll-out of 
Medicare Part D has been a "difficult transition" and, although the Centers for Medicare 
and Medicaid Services (CMS) has worked hard to make some incremental improvements, 
many problems with Part D will not go away due to flaws in the basic design of the 
benefit and its operation.  In this written testimony, we first describe the problems Part D 
enrollees now face -and will continue to face - as the Part D program progresses.  
Secondly, we use our experience with current implementation problems to analyze 
broader structural flaws with Part D and propose some recommendations to make the 
benefit work better for all beneficiaries.   

II.  IMPLEMENTATION OF MEDICARE PART D -- ONGOING PROBLEMS   
FOR BENEFICIARIES
        As widely reported by Medicare beneficiaries, advocates, pharmacies, physicians 
and the media, there have been myriad problems with the implementation of Part D.  
While many individuals are getting their prescription drugs, and some improvements 
have been made to correct problems in regard to data issues and Part D plan phone 
accessibility, beneficiaries still face numerous problems that will not get better without 
fundamental changes made to the way the program is designed and administered.  
Without addressing the issues outlined below, Medicare beneficiaries will continue to 
face problems navigating Part D and getting the medications they need at the lowest cost.

	Overview
        The HICAP network and other advocates around the country report that their clients 
are overwhelmed by the sheer number of choices and complexity of Part D plans.  Some 
were auto assigned to a plan without regard to their pharmaceutical needs while others 
were faced with the complexity of choosing a plan from dozens of different designs.  
Once in a plan many have been unable to obtain their prescription drugs or have had to 
pay full retail prices when their subsidy status was inaccurately recorded by CMS or the 
plan.  Advocates report that those who are dually eligible encounter the most dire 
problems, but many of these problems can and do affect Medicare beneficiaries 
regardless of their economic status.   
Over 6 million dual eligibles had their drug coverage switched on a single day from 
Medicaid to Medicare, resulting in massive systems failures at the pharmacy level, the 
plan level, at 1-800-MEDICARE and the Medicare website.  The sheer volume of dual 
eligibles, combined with their generally poorer health status and inability to pay for their 
own medications, swamped the resources of most local programs designed to help 
Medicare beneficiaries navigate this new benefit.  Many Part D enrollees simply did not 
get their prescription drugs, and continue to experience difficulty due to a number of 
problems, including:
        ?	CMS and contractors' databases fail to reflect correct eligibility status.
        ?	Consumers, advocates, and pharmacists are unable to get through to Part D 
plans.
        ?	When reached, 1-800-MEDICARE and Part D plan customer service 
representatives are often unable to provide accurate information.
        ?	Dual eligibles were auto-assigned to Part D plans without regard to their 
pharmaceutical needs or their ability to pay premiums for Medicare Part A and 
B benefits in MA-PD plans.  
        ?	CMS' "backup" point of service system (Anthem/Wellpoint) fails to provide 
prescription drugs to dually eligible beneficiaries.  
        ?	Widespread system failures result in pharmacies charging the wrong cost-
sharing for drugs, causing duals to go without critical medications when they 
are unable to pay.  
        ?	Part D plans and contracting pharmacies fail to honor transition plan "first fill" 
obligations, and 
        ?	Consumers of all economic circumstances are unable to file exceptions and 
appeals with Part D plans to get the drugs they need. 

Understanding the Benefit
        California HICAP counselors and their counterparts nationwide have been working 
tirelessly to help educate Medicare beneficiaries about the new Part D benefit and assist 
them in exploring their enrollment options.  In addition to the unprecedented volume of 
demand for their services, the nature and structure of the Part D benefit injects a level of 
complexity that requires significantly more time, effort and expertise in counseling each 
consumer.  Program managers estimate that most people choosing a plan require several 
hours of counseling time and often multiple counseling sessions (each of several hours in 
length) to collect information about their drug usage and research plans that cover those 
drugs at an affordable copayment and at the pharmacy of their choice.
        The sheer number of drug plans available presents an overwhelming choice for most 
beneficiaries.  Each plan differs in structure, benefits, and costs and some are sold by 
multiple entities under co-branding agreements with the plan sponsor.  One Part D 
sponsor's product in California, for example, is being sold (or "co-branded") by 14 
different insurance companies; another sponsor co-brands with 12 different companies.  
In California, 18 sponsors offer 47 stand-alone prescription drug plans (PDPs). In 
addition, beneficiaries can also choose from varying numbers of Medicare Advantage 
plans, both with and without prescription drug benefits.   In Los Angeles, for example, 
there are approximately 70 different PDPs and MA plans from which to choose.  Tiered 
formularies, utilization management tools (such as prior authorization) and price 
differences between contracting pharmacy networks further complicate the decision-
making process.  In addition, this information is not always available and accurate on the 
Medicare website.
        Medicare beneficiaries are unable to differentiate between PDPs and the various MA 
plans such as HMOs, PPOs, Private Fee for Service Plans, and Special Needs Plans.  
Some MA plans include prescription drugs (MA-PDs) in their package of Medicare Part 
A and B services and others don't.  Consumers are understandably baffled by the 
complexity and number of choices and can't be expected to understand the myriad of 
details necessary to choose the most appropriate plan for their needs.  

	Enrollment and Eligibility Issues
        Unlike enrollment into Medicare Parts A and B, which is handled by the Social 
Security Administration, individuals must choose a Part D plan from a vast array of 
choices and purchase a particular Part D plan in order to get the new prescription drug 
benefit.  Computer exchanges of data between Part D plans, the Centers for Medicare and 
Medicaid Services (CMS) and its contractors complicate beneficiary enrollment and 
disenrollment and lead to gaps in coverage.  Multiple levels of communication and data 
exchanges must occur before medications can be dispensed by a pharmacy contracted 
with a Part D plan.
        The pharmacist must electronically query the plan to determine whether a 
beneficiary is enrolled in that plan, whether the drug is on the plan's formulary, whether a 
deductible applies, and what copayment responsibility exists for the particular drug 
covered by the plan.  If that data is not readily available the pharmacist must phone the 
plan to obtain this information.  The plan cannot confirm the beneficiary's enrollment and 
copayment responsibility with the pharmacy until CMS has confirmed the beneficiary 
enrollment and subsidy status, and whether the person is enrolled in another plan or 
covered by an employer plan receiving the federal subsidy for employers.  Any data flaw 
along this chain will result in medications being withheld or beneficiaries paying the 
wrong price, if they can afford it, for their medications.     
        Data flaws affect all Medicare beneficiaries regardless of their status, but they affect 
those who are dually eligible for Medicare and Medi-Cal (Medicaid) most acutely.  While 
both consumer advocates and California's state Medicaid Agency (Department of Health 
Services - DHS) report incremental improvements in CMS data systems reflecting 
eligibility and enrollment, there are continuing data problems that lead to gaps in 
coverage for dual eligibles.  The current "back-up system" for dual eligibles who are not 
assigned to a plan - the Point of Sale system run by Anthem/Wellpoint - allows many 
duals to fall through the cracks.  Instead, they must rely on the state's temporary 
emergency funding in order to obtain their prescription drugs.  Unless California takes 
further action, however, this emergency funding will run out in a matter of weeks, 
possibly months.  More than half of all states have had to assume responsibility for the 
poorest of their residents to make up for the failures of the national program.  
        According to the state Department of Health Services, an estimated 10,000 
Californians  will become dually eligible for Medicare and Medi-Cal each month, thus 
becoming a dual for the purposes of Part D benefits only.  DHS anticipates that despite 
current efforts to alleviate data problems, there will be ongoing delays in CMS auto-
enrollment of these individuals into a Part D plan.  Other states will have the same, 
chronic problem transitioning dual eligibles from their state Medicaid program to 
Medicare for their prescription drug coverage.  
        In addition, there will continue to be delays in eligibility information when dual 
eligibles - or any other Part D enrollee during a permissible enrollment period - first 
enroll in a plan or exercise their right to change plans.  Enrolling in or changing drug 
plans requires complex data exchanges between the old plan, CMS, the new plan, and the 
plan's contractors and sub-contractors.  This information can take many days or several 
weeks to be accurately displayed in the system.  Changes made toward the end of the 
month often will not show up in the system until later the following month, making it 
difficult to obtain drugs in the early part of the month after enrolling in or switching 
plans.
        In late 2005, HICAPs and other Medicare counselors helped numerous dual eligibles 
analyze their auto-assigned plans and find other plans that better suited their individual 
needs.  These duals who "did their homework" however, were penalized in January when 
they found that their records were in chaos; the Anthem/Wellpoint POS system failed and 
did not help them. 

        Example: Helen, age 86, a dual eligible of Humboldt County, changed her auto-
assigned plan on December 15th  to one that better suited her drug needs.  In 
January, her new plan had no record of her enrollment in the plan or her status as a 
dual eligible.  She went 3 weeks without her medications because she could not 
afford to pay for them, until she was able to obtain emergency coverage through the 
state.  She did not receive her new plan's enrollment card until February 10th.  

        Example: Dorothy, a Medicare beneficiary from the central coast of California, 
chose an AARP Part D plan in early November 2005, but days later informed them 
that she no longer wanted this coverage.  Despite confirmation of her request from 
AARP at the time, Dorothy has had the AARP Part D premiums deducted from her 
Social Security check for both January and February and it is not clear when that 
deduction will end or when those premiums will be refunded.


	Low Income Subsidy (LIS)
        In addition to problems with eligibility and enrollment data, many HICAPs and 
other consumer assistance programs report that there are still widespread problems with 
data available to pharmacies and plans that accurately reflect individuals' LIS eligibility 
status and the correct amount of their prescription drug copayment.  This problem is most 
acute when an enrollee switches plans or enrolls in a Part D plan for the first time, 
leading to LIS enrollees being charged inappropriate copayment amounts.  This problem 
occurs for all LIS enrollees - not just dual eligibles. 

        Example: Mildred, age 86, a dual eligible resident of Del Norte County, changed 
her auto-assigned plan in December 2005 to one that better met her drug needs.  Her 
eligibility information for the LIS, however, did not follow, and she had to pay 
approximately 15% of her income on drugs.  After 10 phone calls to various entities 
by the local HICAP, she found that she must wait 6-8 weeks for reimbursement 
from her plan.

Transition Processes
        Despite CMS' request to Part D plans that they extend their transition "first fill" 
coverage of non-formulary drugs through March, HICAPs report that many Medicare 
beneficiaries are unable to access such coverage due to lack of information about 
transition policies at Part D contracting pharmacies and/or the unwillingness of 
pharmacies to provide such supplies.
        Information about these transition processes have been extremely difficult to obtain 
through the plans; this issue is a recurring one and people will continually become newly 
eligible for Part D and will find that their new plan does not cover the drugs they are 
currently taking. The transition process is meant to allow an enrollee to request an 
exception so that his/her non-formulary drug can be covered or to change drugs or drug 
plans.  Many beneficiaries who have been given a transitional supply of non-formulary 
drugs, however, are not receiving notices from plans and contracting pharmacies 
informing them what they should do next (e.g., talk with their doctors about alternate 
drugs, file an exception request, or change plans).

Language Access
        CMS standards require Part D call centers to accommodate non-English speaking 
beneficiaries.   Based upon reports from HICAPs and other advocates, however, non-
English speakers in California, a culturally and linguistically diverse state, are not being 
accommodated.
        In our agency's Sacramento office, we answer phone calls from Medicare 
beneficiaries that for whatever reason are not appropriately routed to their local HICAP 
program.  One of our staff members, Marta Erismann - also a HICAP counselor - has 
personally assisted over 300 Spanish speakers in the last few months, many of whom 
have been unable to communicate with their plans.  
        Many of Marta's Spanish-speaking clients reported that their Part D plans did not 
have bilingual representatives, or if they did the number of bilingual staff was limited and 
unable to respond to the demand.  Many told her that they were put on hold for many 
hours waiting for the Spanish-speaking counselor, only to be disconnected after waiting 
for an hour or more.  Many were told numerous times to "call back in one hour" on 
several continuous days.  Numerous callers reported only being able to leave a voice-mail 
message with their plans, many leaving messages that went unreturned for two or more 
weeks.   On the occasions when non-English speakers were able to talk to plan staff, the 
staff was not generally knowledgeable about Part D and unable to respond to their 
questions. 
        The problems for non-English speakers carry over into pharmacies, as well.  Many 
pharmacists, due to lack of bilingual staff, are not able to communicate to Medicare 
beneficiaries the reason they are being denied medications.  Many of these individuals 
leave their pharmacies, not understanding why they can not get their medications. 

Rural Issues
        In several rural counties of Northern California, the local pharmacy is contracted 
with a single PDP, one with a premium too high for duals and people with low income 
assistance.  Other than a Regional PPO plan, there are no MA-PD plans in these counties.  
People in all but one PDP must drive many miles to the nearest chain pharmacy over 
mountain roads that become impassable in bad weather.  The nearest chain pharmacies do 
not provide home delivery services that are provided by the local pharmacy, a serious 
problem for people who cannot get to the contracted pharmacy.  Mail-order prescriptions 
offered by other Part D plans do not always cover all needed medications, or deliver 
drugs in a timely fashion.

Marketing Misconduct
        Amid the confusion over the new Part D benefit, HICAPs and other Medicare 
counselors report inappropriate marketing performed by plan representatives.  Some 
HICAP managers describe speaking with clients who leave marketing presentations with 
no idea what they just had signed up for.  Part D plan agents, with little or no oversight, 
can take advantage of the general confusion surrounding Part D and steer people towards 
plans that will result in enrichment of the agent, but might not be the best plan for the 
enrollee.

        Example:  The HICAP program in Ventura County reports that a Part D plan agent 
has apparently switched a group of board and care residents from the plans they 
enrolled in with HICAP's help, to the plan that the agent was selling, without regard 
to their individual drug or pharmacy access needs. 

Added Cost Burdens for Dual Eligibles
        Consumer assistance programs across the country report that many dually eligible 
individuals have been charged inappropriate cost-sharing for their drugs, including 
deductibles and copayments.  Even when the low-income subsidy (LIS) is correctly 
applied, however, it must be made clear that most dual eligibles cannot afford the new 
cost burdens that are permissible under the LIS.
        California is one of many states that does not force Medicaid recipients to pay 
prescription drug cost-sharing.  While dual eligibles are automatically enrolled in the 
low-income subsidy (LIS, or "extra help") which covers some of their Part D expenses, 
dual eligibles in California (and many other states) now face additional cost burdens that 
are out of their reach.  HICAPs and other consumer assistance programs in California are 
already hearing reports of people unable to pay their rent, grocery and other survival 
costs due to these increased cost-sharing amounts. 
  	Unlike current Medicaid rules, pharmacies can deny drugs to those who cannot 
afford to pay the new cost-sharing requirements.  The only place where dual eligibles will 
be exempt from these new obligations is in certain long term care facilities such as 
nursing homes, but not assisted living/residential care facilities for the elderly.  This, 
unfortunately, creates a perverse incentive towards institutionalization (and goes against 
the spirit of the Olmstead decision).
        HICAPs report that most pharmacies are not using their discretion to waive copays 
for LIS individuals.  HICAP programs and other non-profit agencies are receiving many 
calls from people seeking assistance in paying the copays - for which there is currently 
none.  

        Example:  A paraplegic client of the Health Consumer Alliance in California only 
makes $800 a month.  Due to his many complicating medical issues, he is on 35 
medications.  He cannot afford the $3-5 co-payments for his meds.  His delivery 
man has paid his co-pays the last two months.  He says that he will have to choose 
between paying for his rent, food, and medications.

        Example:  Linda, a client of the Health Consumer Alliance in San Diego, has an 
income of $842 a month.  She takes about 30 medications and cannot afford the $1, 
$3, $5 co-payments.  She says that she will be out of money for food by the end of 
the month.  If she were to move into a nursing home, she would have no 
copayments.

        Example:  Every HICAP counselor in Humboldt County, CA, reports hearing at 
least one client report that they will die because of their inability to afford their drug 
copays.

        Example:  One HICAP manager in the Central Valley, responding to a distraught 
client who could not afford her copays for her insulin, went down to the client's 
pharmacy to pay her copays for the month.

        There are additional unintended consequences and costs faced by low-income 
individuals due to the problems with Part D implementation.  HICAP counselors report 
that many of their low-income and/or non-English speaking clients do not have land-
based telephone lines; instead, they rely on cell phones, sometimes using prepaid 
minutes.  Many saw their minutes drained as they waited "on hold" for hours for a 1-800-
MEDICARE customer service representative or a Part D plan representative.  Some had 
their phone service cut off; some had to borrow funds to obtain additional minutes to 
continue their efforts to contact Medicare or seek information from their plans.

Exceptions and Appeals
        Once transition fills and various states' emergency drug coverage run out, many 
more Part D enrollees will be forced to use the exceptions and appeals process in order to 
obtain non-formulary drugs.  Current Medicare rules give Part D plans broad flexibility in 
how they administer their exceptions processes, including the form of request (oral or 
written) and the type and amount of evidence prescribing physicians must submit to 
prove medical necessity. Although CMS has posted a model form to be used to request a 
coverage determination, each plan can create its own process.  Some plans are requiring 
the submission of clinical notes verifying that all drugs on the formulary are either less 
effective or harmful for the beneficiary or both.  Because each plan's process is different, 
physicians must deal with multiple processes to adequately serve all their patients.  Many 
doctors are unwilling to go through this process because they say the plans require too 
much information.  Some HICAPs report that some local medical groups are establishing 
policies requiring scheduled office visits with physicians in order to assist with patient 
exceptions, in order to receive some type of compensation for their time.
        Overall, Part D enrollees and those that are assisting them are having difficulty 
navigating the exceptions/appeals process.  We fear that the volume of exceptions (along 
with the need to assist with these requests) will increase exponentially once current 
transition first fills run out (if available/accessible) and California's emergency drug 
coverage for dual eligibles expires. 

        Example:  Mr. H., a 23 year old Medicare beneficiary in El Dorado county, was 
stabilized on an anti-psychotic drug prior to joining a Part D plan in January.  
Although his new plan covered his drug, it did not allow for the amount and 
quantity prescribed by his treating psychiatrist.  Mr. H's family began contacting his 
plan in early January and his psychiatrist wrote two separate requests to the plan to 
cover his drug in the requested dosage amount.  When the HICAP program later 
intervened towards the end of the month because neither Mr. H. nor his psychiatrist 
had received a written response from the plan, a plan representative replied that the 
plan had not responded because the physician had not used the correct form.  Mr. H. 
changed plans in February.  

III.   STRUCTURAL PROBLEMS -- PART D BENEFIT DESIGN
        As referenced above, HICAP counselors and their counterparts nationwide have 
been working tirelessly to help educate Medicare beneficiaries about the new Part D 
benefit and assisting them in exploring their enrollment options.  The nature and structure 
of the Part D benefit, however, injects a level of complexity that requires significantly 
more time, effort and expertise in counseling each consumer.  Trying to both decipher 
and navigate the range of Part D plans, drugs covered on their formularies, applicable 
cost-sharing based upon which tier a drug is in, assessing any utilization management 
tools that might apply to a covered drug, and investigating which pharmacies contract 
with a given plan are all challenging, at best.
        For further analysis of issues relating to enrollment/disenrollment protections and 
choices, as well as access to plan information about utilization management tools and 
transition plans, see our website for issue briefs we have co-authored with the Medicare 
Rights Center (www.cahealthadvocates.org). 

        Lack of Standardization
        The sheer number of drug plans available that differ in structure, benefits and cost, 
make informed choice on the part of beneficiaries difficult to achieve.  Tiered 
formularies, utilization management tools (such as prior authorization) and contracting 
pharmacy networks further complicate decision-making.    In addition, the flexibility Part 
D plans are given in designing their exceptions process, including determining the form 
of request along with the level and type of medical evidence required, hinders 
beneficiaries and their prescribing physicians in obtaining needed drugs.
Part D plans are required to cover all medically necessary drugs within the scope of 
drugs that are coverable under the Medicare statute.  Many Medicare beneficiaries with 
chronic conditions and who take multiple prescriptions, however, are having difficulty 
finding plans that cover all of their prescription drug needs.  Even if a particular drug is 
covered, plans can put higher-cost drugs in higher cost-sharing tiers, limiting the benefit 
of having a particular drug "covered" by a plan.  Further, plans do not adequately explain 
the restrictions they impose on certain drugs, leaving potential enrollees uncertain 
whether or not the drugs would be covered for them.  In other words, even if a drug is 
covered by a plan, it can be both unaffordable - due to its tier placement, or unavailable - 
due to onerous prior authorization requirements.
        The Medicare program should provide a limited number of standard, uniform benefit 
packages, and standardize the benefit, cost sharing, and procedures provided through 
private plans.  CMS should consult with the NAIC, industry representatives, and 
consumer groups to standardize the Medicare Part D benefit in the same way Medicare 
Supplement insurance (Medigap) products were standardized in 1990.   In addition, 
exceptions processes should be uniform and standardized among all plans, with a single 
form made available to all physicians and pharmacists.

	Lack of Safety Net Coverage for Dual Eligibles
        When drug coverage for dual eligibles was switched from Medicaid to Medicare on 
January 1, 2006, dual eligibles lost much more than drug coverage administered through 
their state program, they lost more comprehensive coverage, with less restrictions, less 
cost-sharing and more due process protections.  As discussed above, data exchange issues 
will continue to leave them with gaps in coverage and protection from high costs.  
The best way to protect dual eligibles who are unable to access their drugs due to data 
system problems reflecting eligibility, enrollment and LIS cost-sharing, is to continue 
Medicaid coverage (and federal matching funds) to serve as a true payer of last resort.   
Absent a Medicaid extension, we recommend that the Anthem/Wellpoint system be 
redesigned and expanded to serve as a payer of last resort as a means of addressing all 
eligibility and enrollment problems that dual eligibles face (as has been recommended by 
California's DHS).  

        Expand Enrollment into Low Income Subsidy (LIS)
        Many Medicare beneficiaries who are eligible for the low income subsidy have 
failed to apply.  While as many as 8 million beneficiaries are estimated to be eligible, 
only 1.4 million have actually applied and been found eligible.  Of those that applied, 
over 60% were denied not because they did not meet the income test, but because their 
resources were too high. 
        Elimination of the asset test for the LIS would greatly expand eligibility to a benefit 
that can truly help needy individuals with Part D costs. 

	Minimal Oversight and Regulation
        A great deal of flexibility is given to Part D plans throughout virtually all aspects of 
Part D.  Even during the early roll-out of Part D, when it was becoming clear that there 
were major problems with beneficiaries accessing their drugs due Part D plan failures in 
honoring transition policies and providing adequate lines of communication with 
beneficiaries and pharmacists, CMS continued to "request" and "recommend" that the 
plans extend their transition periods and provide more accessibility rather than demand it. 
The Medicare program should impose more strict requirements on Part D plans, 
including the following: 
         Stricter formulary requirements (require the plans to cover more drugs)
         Stricter transition policies (requirements, rather than recommendations, for 
longer "first fill" periods)
         Standardized forms and procedures for exceptions and appeals
          Accessibility standards
                o availability of plan-specific information (e.g. required posting of plan 
materials, including transition plans and exception and appeals 
processes on plan websites and/or CMS website)
                o broader language access for non- and limited-English speakers
                o greater availability of alternative formats (e.g. for individuals with 
limited/no sight)
         Enforce existing pharmacy access requirements for Part D plans, especially in 
rural areas, or provide alternatives 

IV. CONCLUSION
        Medicare beneficiaries deserve a prescription drug benefit that they can understand 
and easily access.  While many individuals are successfully getting their prescriptions 
filled and there have been some improvements in data issues and Part D plan 
responsiveness, many problems encountered by Part D enrollees will not go away 
without further attention and intervention.
        Thank you for the opportunity to provide these comments.  For more information, 
please contact CHA.  Respectfully submitted by: 


David Lipschutz					Bonnie Burns 
Staff Attorney					Training & Policy Specialist 
California Health Advocates			California Health Advocates 
3435 Wilshire Blvd., Suite 2850			Ph: (831)438-6677 
L.A., CA 90010					FAX: (831)438-2441			
Ph: (213)381-3670							[email protected]  
FAX: (213) 381-7154					 
[email protected]			 

	MR. DEAL.  Thank you.  Ms. Rawlings.
        MS. RAWLINGS.  Thank you.  Chairman Deal and other distinguished 
members of the committee, thank you for the invitation to address you 
today.  My name is Susan Rawlings and I am President in charge of 
Senior Services for WellPoint, Inc. and that is the parent company of 
Blue Cross Blue Shield of Georgia, Indiana, and Maine.  The majority of 
my career experience has focused in Medicare programs and retiree 
health plans that deliver products, programs, and services that meet the 
needs of our senior and disabled populations.
	I am here today to talk to you about Part D implementation, but I 
would like to first start off by saying that for those WellPoint customers 
and pharmacists that we have not been able to serve within our own 
normal standards, we apologize.  We are not discouraged, though.  We 
are working diligently day and night and are making progress, which I 
will share with you today.
	Prior to the launch of Part D we provided access to care for over one 
million Medicare members and we continue this tradition with the new 
Medicare Part D benefit and we offer the new prescription drug benefit 
through our Medicare Advantage prescription drug plans, or MAPDs.  
We also have three regional PPOs, or the new program available through 
the MA, and they have the Part D prescription drug with them.  We also 
offer stand-alone prescription drug plans in all 34 regions.  WellPoint 
now contracts with 98 percent of rural, urban, and suburban pharmacies 
across the nation and our network continues to grow.  We currently have 
an estimated 1.2 million Part D members, and approximately 60 percent 
of those are the auto-assigned dual eligibles.
	Through the end of February, or February 27th, to be specific, we 
have already processed about 7.2 million prescriptions.  WellPoint is 
fully committed to supporting effective implementation of Part D for all 
Medicare beneficiaries together with our partners at CMS.  Our highest 
priority is to make sure seniors and disabled Americans are getting their 
prescription filled on a timely basis and are paying no more than they 
should.  We are paying special attention to the transition to Part D for 
dual eligibles, especially those missed in the auto-enrollment process.
	The facilitated enrollment program was created for just that purpose, 
to be a safety net for those dual eligible beneficiaries who were somehow 
missed in the auto-enrollment.  WellPoint is the CMS contractor for this 
program.  The process that was created allows the pharmacist to submit a 
claim for a prescription for a non-enrolled dual eligible person and 
enables the beneficiary to leave the pharmacy with their prescription.  
Everything the pharmacist needs to know about the process is written on 
a standard instruction sheet and has been provided to independent 
pharmacies, chains, and the pharmacy associations.  If a pharmacy 
follows the steps described on the sheet, the dual eligible will be enrolled 
in a WellPoint plan and can immediately access their new drug benefits.
	The pharmacy is a key partner in the program overall and especially 
in making this particular element work effectively and efficiently.  They 
are responsible for verifying the eligibility of this individual when they 
are at the pharmacy and what that means is looking at their card, the 
Medicare card with their number on it, and they also are required to enter 
appropriate and minimal information into the system like the name, 
address, and birth date and a valid Medicare number in order for the 
process to work effectively.  These modest requirements promote faster 
prescription processing and acts as important safeguards that protect 
pharmacists, plans, and CMS from potential abuse of the system.
	This process is, in fact, little different than the process used to bill 
any public or private plan in the pharmacy and I can tell you it is 
working.  As of February 27th, we have processed approximately 1.2 
million claims through this system in every State in the country and that 
has enabled about 120,000 people to get their prescriptions and refills 
now, in the second month.  This unique program on the facilitated 
enrollment system between CMS and WellPoint, having served almost 
120,000 people for two straight months, is by almost any measure a 
success.  We are quite proud of it.
	I would like to highlight a number of proactive steps we have taken, 
however, to help all Medicare beneficiaries around the country.  Like my 
colleagues on the panel, we faced a number of challenges as we have 
moved through this in handling the service for our pharmacists and our 
members.  We increased our staffing in our call centers, both in our 
pharmacies and our beneficiary call centers; we have added significant 
technological capability to expand capacity and to streamline our 
processes.  We voluntarily extended our formulary transition rules from 
30 to 90 days beginning January 1st before CMS asked us to and we have 
extended the facilitated enrollment prescription quantities from an 
allowed 14 days in early January to 30 days in mid-January, so we have 
been filling a full month there.
	We have enhanced our communication efforts using multiple 
strategies with pharmacies and pharmacy associations, and these steps 
are working.  We have a lot of steps left to take, but we are seeing 
significant improvements.  For example, in our beneficiary call centers, 
our average speed to answer how long it takes us to answer the phone has 
improved; over 80 percent as compared to the first couple of weeks of 
January.
	I would like to take this opportunity to recommend some additional 
strategies that CMS might consider to further improve the Part D 
implementation process and we very much appreciate their efforts to 
work with us collaboratively on these recommendations.  First, to 
continue aggressive efforts to provide correct, accurate eligibility 
information.  We have seen significant improvement from the beginning 
of January, but there is still more to do.  Resolving this single issue will 
accelerate the pace at which the overall program is functioning smoothly.
	And second, clarify that beneficiaries who choose to switch plans 
and enroll after the 15th of the month may not have their enrollment 
materials before the first day of the following month just due to data 
processing.  This would help alleviate confusion among beneficiaries, 
including those for whom the data files may not yet correctly indicate 
their eligibility for the low-income subsidy.
	In conclusion, I would like to say the Part D program is already 
making a big difference in the quality of life for many Medicare 
beneficiaries.  We share the concern for beneficiaries expressed by many 
stakeholders, including this subcommittee, but I also want to 
acknowledge that this unprecedented public/private partnership between 
our industry, pharmacies, beneficiaries, and CMS brings together the 
talent and determination necessary to solve these problems.  Thank you 
and I would be happy to answer your questions.
	[The prepared statement of Susan Rawlings follows:]

PREPARED STATEMENT OF SUSAN RAWLINGS, PRESIDENT, SENIOR SERVICES, WELLPOINT, 
INC.

Introduction
        Chairman Deal, Representative Brown, and distinguished members of the 
Subcommittee, thank you for the opportunity to discuss implementation of the Medicare 
Part D Prescription Drug Benefit and the unique role that WellPoint's Facilitated 
Enrollment process is playing to address the challenges related to the transition of full-
benefit dual eligibles to the Part D program.  Facilitated Enrollment is functioning as an 
additional layer of protection to help fulfill the nation's promise to Medicare beneficiaries 
with special needs.
        I am Susan Rawlings, Senior Vice President and President in charge of Senior 
Services for WellPoint, Inc.  WellPoint, Inc. is the largest publicly traded commercial 
health benefits company in terms of membership in the United States.  WellPoint is an 
independent licensee of the Blue Cross Blue Shield Association and serves its members 
through Blue Cross and Blue Shield plans in fourteen states and UniCare.  
        My career has been focused on Medicare programs, retiree health and applying the 
principles of geriatric medicine.  At WellPoint, I am building on my experience by 
developing products, programs and services that meet the needs of our senior and 
disabled populations; for example, a key focus of mine over the last year has been the 
planning and application processes associated with the participation of WellPoint 
companies in the new Medicare Part D program.  I am also continuing my efforts to 
broaden the understanding about older adults among multiple stakeholders.  I believe that 
greater insight will be required to ensure that the health care system and the Medicare 
program are well prepared as the baby boomers age.  

WellPoint Participation in Part D Prescription Drug Benefit Program 
        WellPoint has a long history of providing services to Medicare beneficiaries, 
including offering Medicare supplemental insurance and Medicare Advantage programs.  
As of 12/31/05, we were serving over 1 million beneficiaries in these programs across the 
country.  Prior to the launch of Part D, we offered the interim prescription drug card.  We 
have continued that tradition with the new Medicare Part D program.  We offer the 
prescription drug benefit through our Medicare Advantage-Prescription Drug Plans (MA-
PDs) in several regions, including the newly available Regional Preferred Provider 
Organization (PPO) in three regions, as well as stand-alone Prescriptions Drug Plans 
(PDPs) in all 34 regions, encompassing the 50 states and the District of Columbia. 
WellPoint offers three benefit plan options, enabling Medicare beneficiaries to choose the 
benefit plan that best meets their individual medical and financial needs.  The formularies 
that support these products are consistent across the country.  Our formulary designs meet 
or exceed the minimum requirements established in the law. Our pharmacy network is 
made up of 56,437 pharmacies nationwide, representing 98% of available retail 
pharmacies. 
        WellPoint is pleased to report that we have an estimated 1.2 million Part D 
members, of which approximately 60% are auto-assigned dual eligibles.  To date, we 
have processed an estimated 6.5 million prescriptions of which approximately 1.2 million 
were processed through the Facilitated Enrollment program.  


WellPoint Commitment to Part D Success
        WellPoint is committed to supporting the effective implementation of Part D for all 
Medicare beneficiaries.  We are focused first on making sure that these people get the 
prescriptions they need filled timely, and then resolving issues and problems so that all of 
our Part D members have a good experience when they go to the pharmacy.  The 
transition to Part D for dual eligibles, and particularly those that were missed in the auto 
enrollment process, was not flawless and should have been easier for them.  WellPoint 
shares the concern for the beneficiaries, and the frustration of pharmacists, elected 
officials, advocates, the States and CMS, but we are not discouraged.  WellPoint's 
primary goal is to ensure that beneficiaries receive all the benefits of their health 
coverage, including access to prescription drugs, in a timely and beneficiary-friendly 
manner.  We are doing everything in our power to make the transition a success and 
believe that progress is being made.
        As all of the stakeholders work to improve the transition and implementation of this 
program, we must all keep in mind the tremendous value of adding a comprehensive 
prescription drug benefit to the Medicare program.  Millions of seniors will not only see 
cost savings, but true improvements in their quality of life.  The mindset at WellPoint is 
to focus obsessively on enabling seniors and disabled beneficiaries to receive their 
prescriptions, even when they were not initially assigned a plan.  The recent report that 
nearly 25 million now have prescription drug coverage is not just great news, but reminds 
us that we must keep our full attention on resolving barriers to service.  As Part D 
members begin using their new prescription drug coverage, the confusion in the 
marketplace will abate and a solid foundation for the Part D program will begin to take 
hold.  

Recognizing Dual Eligibles As a Vulnerable Population
        Continuing to improve the enrollment process is especially critical for the 6.3 
million dual eligibles who often have more health care needs than other Medicare 
beneficiaries.  Many dual eligibles live with chronic conditions that require multiple 
medications.  They may have physical or cognitive disabilities, including mental health 
illness and Alzheimer's disease.  They may suffer from diabetes or HIV/AIDS, and they 
may live in a nursing home.  We provide services to dual eligibles facing cultural, 
linguistic and literacy barriers.

A "Customer First" Approach to Problem-Solving 
        "Customer first" is a core value at WellPoint.  Our number one priority for this new 
drug program is that each beneficiary leaves the pharmacy with their prescriptions filled 
at the appropriate cost to them.  For this reason, WellPoint is committed to shielding 
beneficiaries from complex work-around solutions and shielding pharmacists from 
unavoidable back-end reconciliations.
        The level of collaboration among CMS, plans, pharmacies and other stakeholders is 
unprecedented.  Continuing to improve on the progress we've made requires maintaining 
this collective effort. A shared approach to problem solving is the essential ingredient for 
making this new program work for all beneficiaries.  Stakeholders are stepping up to the 
plate and accepting mutual accountability for meeting the challenges and ensuring the 
success of the Part D program.  When all parties are bound by a common interest in 
putting the beneficiary first, an environment is created that allows for constructive 
criticism and open dialogue.  The results being timelier implementation of the steps 
needed to achieve a smooth transition, faster identification of new issues, and smarter 
problem resolution.   

Facilitated Enrollment Program: A Pharmacy Point of Service (POS) Solution
        In early November, 2005, CMS approached WellPoint to develop a pharmacy-based 
solution to ensure that any dual eligible who was not auto enrolled would still get a 
needed prescription filled.  WellPoint was ideally positioned for this role because we 
were the only company offering a plan with a premium below the low-income benchmark 
in all fifty states.  On November 21, 2005, WellPoint signed the contract to become the 
"Facilitated Enrollment", or "Point-of-Service" (POS) vendor, for CMS.  We agreed with 
CMS that no dual eligible, who are among Medicare's most vulnerable beneficiaries, 
should experience any gaps in coverage.  
        Once the contract was signed, WellPoint began a massive effort to operationalize the 
Facilitated Enrollment process in time for a January 1st effective date.  A successfully 
designed safety net program would require executing many tasks related to claims 
administration, staff training, outreach and education, and other core areas of operation in 
both our health plans and our PBM.  WellPoint was particularly focused on 
communication strategies, recognizing that working jointly with CMS to educate 
pharmacists would be critical to their use of this new process.
        The Facilitated Enrollment process makes enrollment possible in those situations 
where a full benefit dual eligible visits the pharmacy and the pharmacist discovers that 
the individual has not been auto-enrolled into a Part D plan.   With special facilitated 
enrollment, a dual eligible is enrolled into a WellPoint plan and can immediately access 
their Part D prescription drug benefits.  A beneficiary can, however, also opt out and 
select a different Part D plan at any time.  Pharmacy associations, chains and individual 
pharmacies have been provided information describing our Facilitated Enrollment 
solution.  
        The Facilitated Enrollment process is straightforward and consistent with putting the 
dual eligibles first: establishing a minimum threshold for proving Medicaid and Medicare 
eligibility in order to reduce the burden on the beneficiary.  Let me describe the steps that 
a pharmacist can follow on behalf of a dual eligible that visits the pharmacy before he or 
she has been auto-enrolled but who has a Medicaid card:
        1. The pharmacist bills Medicaid and the claim is denied.
        2. Pharmacist checks for Medicare eligibility by one of the following: 
                o Submitting an E1 query into the TROOP facilitator;
                o Calling 1-800-MEDICARE;
                o Requesting to see a Medicare card;
                o Requesting to see the Medicare Summary Notice (MSN); or
                o Requesting to see a letter from SSA stating that s/he may be eligible for 
Medicare.
        3. If the pharmacist is unable to verify enrollment in a Part D plan through these 
mechanisms, she/he provides the prescription drug to the beneficiary at the $1/$3 
co-payment levels and bills a special WellPoint account which WellPoint has 
provided on its payer sheet to pharmacists. 

        At WellPoint, the claim is flagged as being outside its normal claims process in order 
to prevent it from being rejected and then the claim is paid.  If the pharmacy is not 
contracted with WellPoint, the pharmacy is sent special instructions to establish the 
mechanism for payment.  WellPoint also flags this individual for CMS's vendor, Z-Tech, 
to verify their full dual eligibility status.   At this point in the process the dual eligible is 
enrolled in a WellPoint plan, (but can always opt out and choose a different plan later).  If 
Z-Tech confirms the dual eligible was previously enrolled in another Part D plan, 
WellPoint still pays the pharmacy and works directly with that plan for repayment.  This 
approach is consistent with our principle of shielding pharmacies from back-end 
reconciliations.  
        The pharmacy is responsible for verifying the individual's eligibility for Medicare 
and Medicaid at the point of sale. As mentioned above, this is done through reviewing the 
Medicare and Medicaid cards or paperwork.  This is a critical step in the process. The 
pharmacy is a key partner in caring for these duals, and drugs should be dispensed only to 
those eligible for the program.   Although the pharmacy is responsible for verifying 
Medicaid and Medicare eligibility, the Facilitated Enrollment program only requires the 
pharmacist to enter appropriate, minimal information such as name, address, birth date 
and a valid Medicare number into the processing system.  This requirement, in effect, 
streamlines the electronic edits at retail and mail to facilitate more rapid prescription 
processing.  At the same time, the minimal data provided acts as important safeguards 
that minimize risk exposure to pharmacists and potential abuse of the program. 

Additional Proactive Steps To Support Implementation Goals
        Based on our experience with launching new programs and serving seniors and 
disabled beneficiaries, we planned for a higher call volume and a longer average call 
length that we thought would be appropriate for this program.  However, like other Part 
D plans, our estimates of the difference in magnitude fell short; for example, we 
experienced calls lasting more than twice as long and call volume nearly 50% higher than 
we predicted.  Beneficiaries and pharmacists were negatively impacted, experiencing 
lengthy hold times and busy signals.  Some abandoned their calls in frustration.  Overall 
electronic eligibility challenges across the program, particularly in early January, also 
created additional volume as pharmacies wanted to discuss eligibility over the phone.  
        WellPoint staff has worked collaboratively with CMS, pharmacies, industry trade 
groups, etc. to resolve the issues facing the program.  We have been working literally day 
and night to fix these problems, as our first priority is that Medicare beneficiaries get the 
prescriptions they need on a timely basis. Many of the issues facing the program are 
systemic and data related and are being aggressively worked by industry and CMS 
workgroups.  We must continue this collaborative work across the industry and with 
CMS - it is improving daily, but there is much more to do.
        To improve our own service levels, some of the most effective mid-course 
corrections we have taken include:
          Increasing staffing as quickly as possible. We have already increased Part D 
staff from 455 people at January 1 to 545 at January 31.  At the end of February 
we have nearly doubled our staff, with 900 trained people serving Medicare 
beneficiaries and pharmacies.  
         Extending the hours of operation daily and to seven days a week. 
         Adding additional T-1 lines in the PBM to speed up phone service and reduce 
busy signals.
         Providing connectivity and availability to interface with CMS on a 24/7 basis.
         Implemented internal procedures to address urgent situations as they arise.

        Recognizing that our rapid response must also include strategies that assist Medicare 
beneficiaries and our pharmacist partners, we have also implemented the following:

On Behalf of Beneficiaries
         Voluntarily extended our formulary transition rules from 30 days to 90 days 
beginning January 1st prior to CMS mandating such a change for all health 
plans. 
         Extended the Facilitated Enrollment prescription quantities from an allowed 14 
days to 30 days.
         Increased beneficiary education to inform them about any changes they may 
experience during the transitional drug period.
         Contracted with outside vendors to accelerate information gathering from Part 
D program applicants to complete applications.  When possible, information is 
obtained from external data sources to expedite automatic completion in order 
to minimize contacting beneficiaries directly. 

On Behalf of Pharmacists
         Adopted an inclusive network development strategy to contract with a range of 
pharmacies, including independent and rural pharmacies, to increase pharmacy 
access to network advantages and to enhance beneficiary access to affordable 
prescription drugs.
         Enhanced outreach by constantly communicating with pharmacies through fax 
blasts, weekly conference calls with independent pharmacy associations (e.g. 
National Association for Independent Pharmacies and other independent chain 
groups) and chain drug stores (e.g. National Association of Chain Drug Stores 
and smaller work groups formed from major chains), and individualized calls to 
reach as many pharmacists as possible about Facilitated Enrollment. 
         Engaged in active training through our PBM on the Facilitated Enrollment 
process for pharmacists when they call in.
         Provided direct technical assistance to pharmacies and their vendors if 
necessary to address software issues.

        In brief, WellPoint has developed multiple mechanisms to eliminate the obstacles 
that interfere with dual eligibles receiving their medications and to ensure that 
pharmacists can serve their Medicare customers according to their own high service 
standards, while receiving timely and accurate reimbursement. 

Customer Service Improvements: Progress To Date
	Improvements Benefiting All Members and Pharmacies.  Our customer phone 
service has not yet reached normal levels, but it is improving.  For example, in our 
beneficiary call centers, our average speed to answer and our abandonment rates have 
improved by over 80% as compared to early January.  
        Facilitated Enrollment Results.  As noted previously, WellPoint's Facilitated 
Enrollment program has processed approximately 1.2 million claims, enabling an 
estimated 240,000 beneficiaries to receive their prescriptions.  As we monitor Facilitated 
Enrollment, we are finding that the process truly operated as a "safety net" in response to 
data and transaction issues.  The good faith behind this program has also created an 
incentive for non-network pharmacists to join our network and enjoy faster payment 
through electronic reimbursement.  Overall, early skepticism regarding receiving 
payment seems to be yielding to an increased comfort level among pharmacists as 
evidenced by the increased claims volume.

Remaining Challenges and Recommendations
	A number of challenges remain that require all stakeholders to work in partnership 
to establish a high performance Medicare Part D program that will make a difference in 
the lives of so many older and disabled Americans.  With enrollment growing daily, we 
must not only invest our time and energy, but also capitalize on the new relationships and 
knowledge gained from this experience.  Addressing issues related to dual eligibles and 
the Facilitated Enrollment process is a top priority for WellPoint.  These more vulnerable 
Medicare beneficiaries are also at the forefront of CMS's efforts as well.  For this reason, 
I would like to take this opportunity to recommend some additional administrative 
strategies that CMS, as our partner, might take to further optimize the Part D 
implementation process, benefiting all constituencies - beneficiaries, pharmacists, CMS 
and health plans.  Our recommendations include:
        1. Intensify efforts to provide correct, accurate eligibility information.  Many of 
the current challenges associated with Part D implementation stem from the 
need for clean, accurate eligibility data.  Resolving this single issue will 
accelerate the pace at which the overall program is functioning smoothly.  
Improving data accuracy and the process for updating and validating the CMS 
eligibility file will ensure claims are paid by the correct plan and the beneficiary 
is charged the correct cost sharing amount, as well as eliminate the incentive for 
pharmacists to substitute the phone or the Facilitated Enrollment process for the 
more appropriate E1 transaction.  CMS and the industry have made substantial 
progress since early January.

        2. In order to avoid confusion and frustration for beneficiaries, CMS should 
clarify that beneficiaries who choose to switch plans and enroll after the 15th 
of the month may not have their enrollment materials before the first day of 
the following month.  Allowing those beneficiaries that enroll in or switch their 
Part D plan prior to the 15th of the month to be enrolled with their new plan on 
the first day of the following month would help address this issue.   CMS 
should likewise educate beneficiaries accordingly about the importance of 
enrolling prior to the 15th of the month.  It is important to note that most states 
already use a similar approach with respect to dual eligibles applying for 
Medicaid eligibility. This recommendation would go a long way towards 
avoiding disruption for those Medicare beneficiaries for whom the data files 
may not yet correctly indicate their eligibility for the low-income subsidy. 

        3. Increase Pharmacy Outreach to Create One-Stop Shopping For Help.  CMS 
has been conducting educational outreach to pharmacies and we commend the 
efforts - and we recommend it continue in earnest.  Additionally, we 
recommend that CMS train their call centers to handle additional pharmacy 
related calls, particularly when pharmacies call about the Facilitated Enrollment 
process.  Currently, CMS refers pharmacists to our call centers when contacted 
about the Facilitated Enrollment process or edit questions.  Since the process is 
not complicated, we would suggest that CMS directly provide instruction to 
pharmacies on how to process a Facilitated Enrollment claim during the initial 
call or, as we add the editing of the Health Insurance Claim Number (HICN), 
share the reason for the Facilitated Enrollment edit.  Pharmacists would 
appreciate the timely assistance and many would use the information to trigger 
the FE enrollment process without having to make a second call to WellPoint.  
We would be pleased to work with CMS to train their staff.

Conclusion
        The January 1st effective date for the launch of the Medicare Part D program brought 
with it a surge of business operations activity and customer service requests.  In 
preparation, WellPoint did extensive advanced implementation planning and outreach, 
knowing that the program was complex, with many moving parts that had to work in 
synchrony.  Our hope was that we had anticipated the major barriers that might arise as 
seniors navigated the enrollment system and pharmacists attempted to fill prescriptions.  
While it was not possible to foresee all the challenges that this enormous undertaking 
would pose, it is in WellPoint's DNA to be a part of the solution.  We will continue to 
strive to get past the hurdles because the Medicare Part D prescription drug program is 
worth it.  
        Thank you for your time.  I would be happy to answer any questions you may have.

        MR. DEAL.  Thank you very much.  We have a reduced audience up 
here now.  Ms. Walsh, let me start with you.  First of all, with regard to 
the dual eligibles who were automatically enrolled.  Did the State do 
that?  Was that a State decision that automatically enrolled them in the 
plans or how was that handled?
	MS. WALSH.  We have drugs for the elderly program that we were 
going to intelligently assign these people into plans so that they would 
have 90 percent or more of their drugs covered and we certainly didn't 
want to leave our dual eligibles, who are more frail and more poor than 
our ESPAP members, without that kind of intelligent assignment.  So we 
sent a proposal to CMS in October that wasn't acted upon until late 
December with approval from CMS.  We were told by CMS you can 
enroll in a plan on the 30th and have coverage on the 1st, so when we sent 
our files to the plans on the 20th, we did expect them and had assurances 
from the plans that they would honor our enrollment for January 1st and 
many of them did honor the enrollment.  What happened primarily was 
they didn't have that low-income subsidy indicator.
	MR. DEAL.  Right.  So your primary problem has been getting that 
low-income subsidy built into the formula?
	MS. WALSH.  Yes, it really has, yes.  Yes.
	MR. DEAL.  All right.  Is progress being made on that?
	MS. WALSH.  Oh, every day.  Things are getting better along those 
lines, but I think, for some reason, we have one particular plan in Maine 
that has the bulk of our people and they still are missing thousands and 
thousands of low-income subsidy indicators.
	MR. DEAL.  And where does that information have to come from, 
CMS?
	MS. WALSH.  Yes.
	MR. DEAL.  Okay.  With regard to the money that the State has 
expended, my understanding is that a part of that money is the 
differential between what the traditional Medicaid program would have 
paid and what the plans themselves may have paid.  You have paid based 
on what the Medicaid would have paid the pharmacists for the drugs and 
you are part of the model, so that differential will be made up to you.  Is 
that your understanding, as well?
	MS. WALSH.  Yes, and I am glad you brought that up because I was 
hearing Dr. McClellan's comments earlier about that and I wanted to say 
the State of Maine and many other Medicaid programs typically 
reimburse pharmacies better than private insurance companies.  What we 
do is we negotiate aggressively with pharmaceutical manufacturers so 
the net price or the net cost to the State, under the Medicaid program, is 
lower than what you are getting under Medicare Part D.
	MR. DEAL.  Is that because of the rebates you are talking about?
	MS. WALSH.  Because of rebates, that is correct.
	MR. DEAL.  Okay.  Mr. Lipshutz, with regard to the problems that 
you have outlined, are you seeing progress being made in terms of 
eliminating some of these problems that initially presented themselves on 
time problems?
	MR. LIPSHULTZ.  The call volumes to the State SCHIP program, the 
HICAPs, has diminished somewhat, but it is my understanding that is in 
large part because the calls were primarily coming from dual eligibles 
prior to the State stepping in with that emergency coverage.
	MR. DEAL.  Right.  I think once we get the dual eligible situation 
ironed out as nearly as possible, much of the complaints will actually go 
away.  Mr. Paul, would that be your assessment, as well?
	MR. PAUL.  That is correct.  We have noticed a significant reduction 
in the call volume since the beginning of January.
	MR. DEAL.  And Ms. Rawlings, I assume you indicated that your 
time is reduced by 80 percent, I think, is what you said the time for 
waiting?
	MS. RAWLINGS.  That is correct, it is.  Yes.
	MR. DEAL.  Okay.  So you know, and Mr. Ettienne, we want to 
extend to you the same expression I did to the representative, Mr. Song, 
from the Community Pharmacists, and that is the role that your chain 
pharmacy people have played in making this transition possible, too.  
You really truly have been heroes at every level because you are on the 
front lines.  We, by necessity, had to put you there and I want to thank 
you for that.  Do you feel like we have made significant progress and do 
you feel like that we have gotten over most of the rough spots so far?
	MR. ETTIENNE.  I think we have made significant progress in the 
process.  I think, like with any large implementation, you expect hurdles 
at the front of it.  Moving forward in the stores, the pharmacists are 
indeed much happier today when compared to January 1st.
	MR. DEAL.  Right.  Well, I think the suggestion that Ms. Rawlings 
made about that if you are going to change plans, you need not expect 
that you can come in the last day of the month and then the first day of 
the next month that somebody is going to have your information there 
and there is not going to be a problem.  I do think that that is the 
information that we need to get out with regard to swapping plans, is to 
be prepared for a little bit of lag time.  We do live in the information age, 
but we don't live in that kind of information age, especially when you are 
talking about millions of people.
	 Well, that will be all that I will ask you.  I do appreciate all of your 
patience, again, your presence here today and I think this will be an 
ongoing discussion that we will have and hopefully the complaints that 
we have heard will not be the same complaints that we hear the next 
time.  Hopefully, we will address those and in anticipation of those, we 
hope that you will continue to share the things that you see that need to 
be corrected with CMS or with us and as much as possible, we will try to 
address those.  Mr. Pallone, you are next.
	MR. PALLONE.  Thank you.  Those of you who were here when Dr. 
McClellan spoke know about my concern with this whole appeals 
process and prior authorization and what is going to happen after the 
transition period is over with.  So I wanted to start by asking Mr. 
Lipshutz about the transition policies and also the appeals process.  We 
have heard a lot of instances where Medicare drug plans failed to honor 
their transition policies and where they were, of course, supposed to give 
beneficiaries a one time fill for prescriptions not on a drug plan's 
formulary without other barriers like step therapy or prior authorization.
	According to calls received by the American Psychiatric Association, 
during the first nine weeks of Part D, in 44 percent of the cases that came 
to their attention, continuity of care was disrupted for vital medications 
covered by CMS's all, or substantially all, guidance because patients 
were unable to obtain needed medications, particularly serious for people 
that have mental health problems.  And it seems to be, in spite of what 
the Bush Administration is telling us, something is not working.  Dr. 
McClellan told us everything is fine but here is an example of where the 
Administration has failed dismally, in my opinion.
	So I just wanted you, Mr. Lipshutz, if you could comment on what is 
happening to individuals with mental illnesses and maybe provide 
examples of whether or not things are really fine, as the Administration 
would have us believe.
	MR. LIPSHULTZ.  I think the example that I highlighted of Mr. H., the 
23 year old Medicare beneficiary who was stabilized on anti-psychotic 
medication is quite illustrative in that he is an individual who was 
stabilized on a dosage amount of a particular medication that was 
amongst the required six categories of drugs that all plans must cover.  
He found, or his family found, that while the drug was covered as 
required under Medicare rules, that he was unable to access the dosage 
amount that his psychiatrist had worked very hard to put together that 
worked for him.  I think that experience is echoed over and over.
	In response to your questions about the transition plans and the 
exceptions and appeals processes, at the outset, CMS put fairly lax 
requirements on plans about the need to provide transition policies.  In 
fact, initially, plans were not required to even provide a first fill for 
prescription drugs.  They could either provide a first fill or contact 
enrollees to sort out whether or not they needed any prescription drugs 
that were not on the formulary to try to work with them to change their 
prescription drugs.
	Since then, CMS has moved in the right direction by requiring more 
out of plans as far as transition first fills, but obtaining what these actual 
policies are from plans and how they are applied has been very difficult, 
from an advocate standpoint, to try to get that information from the 
plans, and we are hearing that lots of individuals are having trouble 
actually accessing that transition policy that CMS has requested plans to 
follow.  In large part, that happens at the pharmacy in problems with 
information exchanges between pharmacies and Part D plans.  A lot of 
pharmacists are unaware of the obligations they have to fulfill or are 
unwilling to honor transition plans.
	MR. PALLONE.  And then that once a transition process, you know, 
or that period is over, then we are going to have more problems, I think, 
with appeals and prior authorization.  There have been a number of 
reports where drugs that are on the formulary have high quota sharing 
and as a result, they are unaffordable and beneficiaries are faced with 
these exceptions and appeal processes and cumbersome prior 
authorization.  Can you talk a little bit about how these things are 
impeding beneficiary access to needed medicines or making excess work 
for pharmacists or doctors?  You know, I mentioned before with Dr. 
McClellan about having some kind of standardization.  Do you think it 
would be wise to adjust cost sharing requirements that standardize and 
simplify exceptions or appeals?  I mean, is there more that can be done in 
that regard?
	MR. LIPSHULTZ.  I think that simplifying the exceptions and appeals 
process along with the utilization management tools would go an awfully 
long way towards helping beneficiaries get their prescription drugs.  A 
number of doctors have informed HICAP programs and beneficiaries 
that they are simply not going to follow the exceptions and appeals 
process because they have to deal with different plans and different 
policies for each Part D plan.  Part D plans have a good deal of discretion 
in how they establish their exceptions and appeals processes.  They can 
determine whether or not they accept requests over the phone or in 
writing, and they can set the amount and type of evidence that physicians 
must provide to the plans in order to determine medical necessity.
	One medical group in northern California has established a policy 
whereby it will require all of its physicians not to assist their patients 
with the exceptions and appeals process unless the patients have 
scheduled office visits with the doctors because otherwise the doctors are 
uncompensated for that time.  But if a beneficiary needs a drug in a quick 
amount of time, that is going to be very difficult for a beneficiary to do, 
to try to schedule a doctor's visit and go in and get that drug.  
Standardization of the exceptions and appeals process, including 
standard forms that were used by all the plans would help both 
beneficiaries and their prescribing physicians access need prescription 
drugs.
	MR. PALLONE.  All right, thank you.  Thank you, Mr. Chairman.
	MR. DEAL.  Thank you.  Mr. Buyer.
	MR. BUYER.  Mr. Ettienne, for the purpose of open disclosure, did I 
pronounce it correctly?  No?  How do you pronounce your name?
	MR. ETTIENNE.  It is okay.
	MR. BUYER.  No, no, no.
	MR. ETTIENNE.  Ettienne.
	MR. BUYER.  For purpose of open disclosure, my daughter, Colleen, 
is a pharmacy student out of Purdue and has worked for CVS for three 
years.
	MR. ETTIENNE.  Okay.
	MR. BUYER.  So I got to live through this, through my daughter, 
because she was working on January 1st and January 2nd and who do you 
think she came home and gave hell to?
	MR. ETTIENNE.  Daddy.
	MR. BUYER.  Daddy, yes.  And so it was pretty unfortunate, some of 
the glitches that, in fact, that occurred, especially on the dual eligibles.  I 
don't think there should be any excuse right now with regard to our long 
term care dual eligibles.  There shouldn't be any excuse, yet I have 
spoken with three different pharmacists in Indiana, three different sizes, 
small, medium and large.  Lafayette, Indianapolis, Bedford.  I didn't go 
to CVS or Walgreens or any of those, these are independent pharmacists.  
The one in Bedford, in particular, said that about 10 percent of his claims 
are still this problem with the dual eligibles and the long term care and 
the deductibles and that is pretty sad.  Is CVS, or are you still seeing that 
problem?
	MR. ETTIENNE.  We have seen a significant reduction in the number 
of problems that we have had from January 1st to today.  I can't say that 
there aren't problems, but the number of problems that we are seeing 
now is dramatically less.  I think the advantage that we have had is the 
preparation.  We have a tremendous team in the corporate office and they 
are working through a lot of the issues and getting that information to the 
pharmacists in an effort to help them process the claims.
	MR. BUYER.  One thing I have learned here in Congress, every time 
we try to make an effort on a legislative front, there are always 
unintended consequences, so by example, when we changed the liability 
with regard to the manufacturing production of small aircraft to bring the 
industry back to the United States, so we changed the products liability 
rules, okay?  So it is kind of a good thing.  Wow.  So we had this 
incredible impact upon what?  The exodus of technical skills out of the 
military into the private sector, the loss of pilots out of the military, right, 
because what did we do?  We have now spawned a new industry because 
we brought back the small plane business in America.  I am talking about 
small plane meaning jets, you know, and wonderful aircraft, but we 
brought that because we made a change in the law.
	Likewise, we now create a program whereby pharmacies are also 
experiencing an increase workload.  You have an increase in workload 
because we have created a program whereby individuals can now access 
their medications, but what pain have we also now increased in the 
health system with regard to we were already short pharmacists and 
technicians?  So is there some--I mean, give me a way ahead, a look 
ahead.  I want you to help us here.  Are we saying Steve, that we need to 
now be in communication with our pharmacy schools around the 
country, that we need to increase the positions because relative to 
demand, this is not going to work?  If that increased by one-third, you 
have only got a certain supply of those pharmacists.  Tell me what we 
have done to your life.
	MR. ETTIENNE.  We certainly have increased workload in the 
pharmacies.  A greater supply of pharmacists is definitely a good thing 
for the industry.  We know, I mean, we have seen in many States across 
the country where pharmacists are indeed in demand, but they are in 
short supply.  If I were to attempt to look into the future, I would say 
hey, you know, this is indeed a good thing for the patient because we are 
getting people drugs that they didn't get prior.  We do need to make 
adjustments to the program as designed to ensure that we don't have 
what you are describing; we don't have any kind of catastrophic events 
down the road.
	I would say if you had some means of increasing the supply of 
pharmacists to deal with the work flow, by all means.  We would be 
happy to step up and work with you in realizing that process.
	MR. BUYER.  I just encourage you today--you are going to be 
telegraphing this, hopefully, before we can see it and we, in turn, can be 
extremely helpful to the colleges and what their requirements are to open 
up these slots.  I just want to do the look ahead.  I want to be prospective, 
not reactive.  So please, when you speak to your comrades, let me know, 
all right?
	MR. ETTIENNE.  We certainly will.  We do need pharmacists, so by 
all means, you cannot wait for that process, just go right ahead.  We will 
be happy to employ them.
	MR. BUYER.  All right, thank you.
	MR. DEAL.  Mr. Allen, you are recognized.
	MR. ALLEN.  Thank you, Mr. Chairman.  I want to thank you for 
being here.  I assure you all that though it may be late and the committee 
has thinned out a little bit, that your testimony is either being watched 
now by other staff members or your testimony has been or will be read 
and we thank you very much for coming here because you do bring an 
experience that we don't get ourselves, obviously.  I had a couple of 
questions.  Ms. Walsh, I wanted to go back to Maine just for a minute.  
There are all these different plan choices and for some people this is a 
curse, not a blessing.  It is too many.  CMS auto-enrolled the dual 
eligibles, 6.4 million across the country, without regard to their diagnosis 
or their current drug regimen.  Now, you took a different approach in 
Maine and I think you described that.  You don't need to go back into 
that, but looking forward, I think it was Mr. Lipshutz who said California 
will have 10,000 dual eligibles a month coming into its system because 
people who are today on Medicaid, you know, obviously some of them 
become 65, they qualify for Medicare so they are covered and they have 
the same sorts of issues.  Going forward, Ms. Walsh, what advice would 
you give CMS on how to deal with the ongoing dual eligible issue?
	MS. WALSH.  Well, I think enrollment into plans and eligibility are 
the two largest issues going forward and I think something CMS could 
do in the future is work more collaboratively with States up front.  States 
typically, of their dual eligible, maintain current drug profiles for 
members.  In Maine, we have built an algorithm and are able to 
recommend which plans people should be going into and I think one of 
the keys to working dual eligibles effectively through this Medicare Part 
D benefit is to really assign them to plans that have the best match for 
their drug benefit, especially because it takes six to eight weeks to get out 
of a plan and into another one.
	MR. ALLEN.  To get out of a plan--well, some people can't get out of 
a plan--
	MS. WALSH.  Some people are stuck there for a long time.
	MR. ALLEN.  About once a year, right?
	MS. WALSH.  Well, I think if you are a dual eligible, you have the 
option under Medicare to change your plan every month.  It just really 
takes almost two months to get into a new plan, so if you have been 
randomly assigned by CMS into a plan and most of your drugs aren't 
covered, you have to wait almost two months to get into a plan where 
your drugs are covered.
	MR. ALLEN.  Okay.  I would like to talk just a little bit, hear from, I 
guess Mr. Lipshultz.  Maybe I will ask this of you.  The virtues of 
simplicity.  I mean, based on your experience, would a simpler plan be 
more usable, easier for seniors and the disabled to navigate than the 
current system?  And if so, how would you suggest we go about it?
	MR. LIPSHULTZ.  Well, to use my mom as an example, and I would 
be the last to say anything disparaging about my mom, but she would not 
be able to figure this program out if it wasn't for my help, who has 
studied the program quite a bit.  I think the fact that there are a number of 
plans and in Los Angeles County you have 47 stand-alone prescription 
drug plans plus at least 20 Medicare Advantage prescription drug plans 
for almost 70 plans, the number of plans, the fact that you need to take a 
look at what is on the formulary.  Then once you see what is on the 
formulary, you have to find out how much you pay for your drug, 
whether or not that drug is subject to utilization management, whether or 
not your drug plan has a network of contracting pharmacies and the fact 
that there is such variance amongst the plans I think would lend itself to 
more standardization and I would encourage the committee to take a look 
at the debate around standardizing the Medicare supplemental insurance 
programs back in the early 1990s which made them a lot more 
understandable and easy to use.  Definitely more standardization would 
help beneficiaries help navigate this benefit better.
	MR. ALLEN.  Okay.  Mr. Chairman, I have just one concluding 
thought here.  I want to come back to this question of savings.  Mr. Paul 
mentioned savings, and Dr. McClellan mentioned savings.  I get very 
worried about our talking about savings in the aggregate which covers up 
a lot of things.  I mean, for example, I think Mr. Paul, you said there 
were real savings enjoyed by millions.  You may be right.  All I know is 
that the big question is compared to what?  We would agree that for 
people who had no prescription drug coverage in the past and now they 
have a plan, probably that plan works unless they don't have very much 
in the way of drug expenses and they are paying more in premiums than 
getting back in cost.  But compared to Medicaid, it is not so clear.  
Compared to those people who are on the pharmaceutical companies' 
own free or reduced cost plans, it is not so clear.  Compared to some of 
the State programs like Maine had, it is not so clear.  So I just, this is a 
pitch for a little bit of complexity here and how we think about because 
clearly all of us on this side of the aisle want those of our constituents 
who can benefit from this plan to get the benefit of the plan.  On the 
other hand, we are still hearing from lots of people who are not very 
happy and the complexity is a part of the issue.  And with that, I won't 
ask you all to comment on that.  Probably enough has been said today, 
Mr. Chairman.  Thanks for your patience.
	MR. DEAL.  Well, thank you, and I thank you for staying with us the 
whole time.  Thanks again to all of you.  Your comments have been 
made a part of the record, and your written testimony has been added.  
Obviously, there are differences of opinion, concerns, but all of us, 
hopefully, are working toward a mutual goal of making this work for the 
people of this country who are eligible for the plan.  We thank you for 
what each of you play a role in making that possible.  With that, the 
hearing is adjourned.
	[Whereupon, at 6:45 p.m., the subcommittee was adjourned.]



RESPONSES FOR THE RECORD SUBMITTED BY THE HON. MARK MCCLELLAN, 
ADMINISTRATOR, CENTERS FOR MEDICARE & MEDICAID SERVICES

 

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