[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
IMPLEMENTATION OF THE
MEDICARE DRUG BENEFIT
=======================================================================
HEARING
before the
SUBCOMMITTEE ON HEALTH
of the
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
MAY 3 and MAY 4, 2006
__________
Serial No. 109-84
__________
Printed for the use of the Committee on Ways and Means
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COMMITTEE ON WAYS AND MEANS
BILL THOMAS, California, Chairman
E. CLAY SHAW, JR., Florida CHARLES B. RANGEL, New York
NANCY L. JOHNSON, Connecticut FORTNEY PETE STARK, California
WALLY HERGER, California SANDER M. LEVIN, Michigan
JIM MCCRERY, Louisiana BENJAMIN L. CARDIN, Maryland
DAVE CAMP, Michigan JIM MCDERMOTT, Washington
JIM RAMSTAD, Minnesota JOHN LEWIS, Georgia
JIM NUSSLE, Iowa RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas MICHAEL R. MCNULTY, New York
PHIL ENGLISH, Pennsylvania JOHN S. TANNER, Tennessee
J.D. HAYWORTH, Arizona XAVIER BECERRA, California
JERRY WELLER., Illinois LLOYD DOGGETT, Texas
KENNY C. HULSHOF, Missouri EARL POMEROY, North Dakota
RON LEWIS, Kentucky STEPHANIE TUBBS JONES, Ohio
MARK FOLEY, Florida MIKE THOMPSON, California
KEVIN BRADY, Texas JOHN B. LARSON, Connecticut
THOMAS M. REYNOLDS, New York RAHM EMANUEL, Illinois
PAUL RYAN, Wisconsin
ERIC CANTOR, Virginia
JOHN LINDER, Georgia
BOB BEAUPREZ, Colorado
MELISSA A. HART, Pennsylvania
CHRIS CHOCOLA, Indiana
DEVIN NUNES, California
Allison H. Giles, Chief of Staff
Janice Mays, Minority Chief Counsel
______
SUBCOMMITTEE ON HEALTH
NANCY L. JOHNSON, Connecticut, Chairman
JIM MCCRERY, Louisiana FORTNEY PETE STARK, California
SAM JOHNSON, Texas JOHN LEWIS, Georgia
DAVE CAMP, Michigan LLOYD DOGGETT, Texas
JIM RAMSTAD, Minnesota MIKE THOMPSON, California
PHIL ENGLISH, Pennsylvania RAHM EMANUEL, Illinois
J.D. HAYWORTH, Arizona
KENNY C. HULSHOF, Missouri
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Ways and Means are also published
in electronic form. The printed hearing record remains the official
version. Because electronic submissions are used to prepare both
printed and electronic versions of the hearing record, the process of
converting between various electronic formats may introduce
unintentional errors or omissions. Such occurrences are inherent in the
current publication process and should diminish as the process is
further refined.
C O N T E N T S
__________
Page
Advisories announcing the hearing................................ 2
WITNESSES (MAY 3, 2006)
The Honorable Mark McClellan, M.D., Ph.D., Administrator, Centers
for Medicare and Medicaid Services, U.S. Department of Health
and Human Services............................................. 10
Beatrice Disman, Chairman, Medicare Planning and Implementation
Task Force, Social Security Administration..................... 33
Susan Everett, North Carolina Regional Coordinator, Medicare
Today, Raleigh, North Carolina................................. 61
Heath Schiesser, President, Prescription Drug Plan, WellCare
Health Plans, Inc., Tampa, Florida............................. 64
Robert M. Hayes, President, Medicare Rights Center............... 73
Bill Wolfe, Vice President, Managed Care, Rite Aid Corporation,
Harrisburg, Pennsylvania....................................... 83
Pam Grisnik, Owner, RX Express, Grove City, Pennsylvania......... 89
WITNESSES (MAY 4, 2006)
The Honorable Henry Waxman, a Representative in Congress from the
State of California............................................ 110
Leslie Aronovitz, Director for Healthcare, U.S. Government
Accountability Office.......................................... 125
Joyce Larkin, Vice President, Public Affairs and Community
Relations, Ovations, UnitedHealth Group........................ 145
Mark Steinberg, Senior Health Policy Analyst, Families USA....... 151
Vicki Gottlich, Policy Attorney, Center for Medicare Advocacy.... 155
Bill Vaughan, Senior Policy Analyst, Consumers Union............. 163
SUBMISSIONS FOR THE RECORD
Alamosa Dialysis Center, Fran Koski, Alamosa, CO, letter......... 182
American College of Physicians, statement........................ 183
American Medical Directors Association, Columbia, MD, statement.. 185
Brief, Cary, Campaign for America's Future, Sherman Oaks, CA,
letter......................................................... 189
Center for Medicare Advocacy, Inc., statement.................... 189
Collins, Shannon, San Rafael, CA, statement...................... 195
Emerick, Therese, statement...................................... 195
Fullerton, Linda, Social Security Disability Coalition,
Rochester, NY, statement....................................... 198
Harrison, W. M., Durham, NC, letter.............................. 200
Health and Disability Advocates and Make Medicare Work Coalition,
Chicago, IL, joint statement................................... 201
Kennelly, Barbara, National Committee to Preserve Social Security
and Medicare, statement........................................ 206
Kieft, Alice, Kewanee, IL, letter................................ 208
Mierisch, George, Salt Lake City, UT, letter..................... 209
Miller, Jessica, Huntington, NY, letter.......................... 210
Muckway, Linda, Muncie, IN, letter............................... 211
National Alliance on Mental Illness, Andrew Sperling, Arlington,
VA, statement.................................................. 212
National Association of Health Underwriters, Arlington, VA,
statement...................................................... 215
National Home Infusion Association, Alexandria, VA, statement.... 216
National Kidney Foundation, New York, NY, statement.............. 219
Reading, Toniann, Mill Creek, WA, letter......................... 222
Rios, Elena, National Hispanic Medical Association, statement.... 222
Romney, Frances, West Valley City, UT, letter.................... 225
Sutherland, Arthur, Sandy, UT, letter............................ 227
IMPLEMENTATION OF THE
MEDICARE DRUG BENEFIT
----------
WEDNESDAY, MAY 3, 2006
U.S. House of Representatives,
Committee on Ways and Means,
Subcommittee on Health,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:05 p.m., in
room 1100, Longworth House Office Building, the Honorable Nancy
L. Johnson (Chairman of the Subcommittee), presiding.
[The advisory and second advisory announcing the hearing
follow:]
ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON HEALTH
CONTACT: (202) 225-3943
FOR IMMEDIATE RELEASE
April 26, 2006
HL-15
Johnson Announces Hearing on Implementation of the Medicare Drug
Benefit
Congresswoman Nancy L. Johnson (R-CT), Chairman, Subcommittee on
Health of the Committee on Ways and Means, today announced that the
Subcommittee will hold a hearing on implementation of the new Medicare
prescription drug benefit known as Part D. The hearing will take place
on Wednesday, May 3, 2006, in the main Committee hearing room, 1100
Longworth House Office Building, beginning at 10:00 a.m. The hearing
will recess at 12:00 p.m. and reconvene at 2:00 p.m. if necessary.
In view of the limited time available to hear witnesses, oral
testimony at this hearing will be from the invited witnesses only.
Witnesses will include Centers for Medicare and Medicaid Services (CMS)
Administrator Mark McClellan, a representative from the Social Security
Administration (SSA), as well as representatives of groups affected by
the new benefit. However, any individual or organization not scheduled
for an oral appearance may submit a written statement for consideration
by the Committee and for inclusion in the printed record of the
hearing.
BACKGROUND:
On December 8, 2003, the President signed into law the Medicare
Modernization Act (P.L. 108-173) (the MMA), which created a new Part D
benefit in the Medicare program to provide coverage for outpatient
prescription drugs. Prior to the law, most outpatient drugs were not
covered by Medicare and many seniors who did not have prescription drug
coverage through another source either individually assumed this
financial burden or went without prescription drugs because of the
cost. According to CMS, starting in January 2006, millions of Medicare
beneficiaries began receiving prescription drugs through the new
program. Since that time, almost a quarter of a billion prescriptions
have been filled, and many seniors have availed themselves of discounts
through their drug plans, and many have saved.
Under the program, beneficiaries could purchase standard coverage,
alternative coverage with actuarially equivalent benefits or enhanced
coverage. In 2006, standard coverage is a $250 deductible, 25 percent
coinsurance for costs between $251 and $2,250, and catastrophic
coverage after out of pocket expenses of $3,600. Once the beneficiary
reaches the catastrophic limit, the program pays all costs except for
nominal cost-sharing. Low income subsidies are provided for persons
with limited assets and incomes below 150 percent of the poverty level.
Coverage is provided through prescription drug plans or Medicare
Advantage prescription drug (MA-PD) plans. The program relies on
private plans to provide coverage and to bear some of the financial
risk for drug costs; Federal subsidies are provided to encourage
participation. Premiums are determined through a bid process and plans
compete based on premiums, benefits and negotiated prices.
To date, hundreds of private insurance plans are contracting with
CMS. Accordingly, Medicare beneficiaries have a number of options to
choose from, including benefit plans provided by Health Maintenance
Organizations (HMOs), Preferred Provider Organizations (PPOs) and stand
alone drug plans. In addition, under the MMA, a 28 percent subsidy is
provided to employers and unions whose plans at least equal the
standard coverage for retiree drug costs between $250 and $5,000, and
this is excludable from taxation. Employers are also permitted to
structure their benefits around Part D coverage and enroll retirees in
Part D plans.
There are currently about 43 million Medicare beneficiaries.
Although the Part D drug benefit program is voluntary, about 27 million
Medicare beneficiaries are directly benefiting as a result of this
program. The latest figures show more than 8 million Medicare
beneficiaries have decided to sign up for stand alone prescription
plans, up from about 3 million in January, and these numbers continue
to grow. Finally, the MMA federalized the costs of about 5.8 million
``dual eligible'' beneficiaries, those who are eligible for both
Medicare and Medicaid. Problems with the transition for this population
were reported and continue to be by beneficiary groups, pharmacists and
some States.
The Centers for Medicare and Medicaid Services have already begun
the process of reaching out to private drug plans for the 2007 plan
year. It remains to be seen how beneficiaries and plans will respond to
the first year of the program and the upcoming May 15 enrollment
deadline.
In announcing the hearing, Subcommittee on Health Chairman Nancy
Johnson stated, ``Today more seniors than ever before have access to
affordable prescription drug coverage through the Medicare drug plan,
and more seniors are signing up every day. The Medicare drug benefit is
the biggest expansion of the program since it was created 40 years ago.
Today more than 27 million Medicare beneficiaries have drug coverage;
including 8 million who have signed up for stand-alone drug plans.
During this hearing, we will examine how this significant new program
is being implemented and discuss with Medicare beneficiaries, federal
officials and health care providers how we can improve the drug benefit
going forward.''
FOCUS OF THE HEARING:
The hearing will focus on implementation of the new Part D benefit.
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ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON HEALTH
CONTACT: (202) 225-3943
FOR IMMEDIATE RELEASE
May 01, 2006
HL-15 Revised
Change in Time for the Hearing on Implementation of the Medicare Drug
Benefit
Congresswoman Nancy L. Johnson (R-CT), Chairman, Subcommittee on
Health of the Committee on Ways and Means, today announced that the
Subcommittee hearing on implementation of the new Medicare prescription
drug benefit known as Part D, previously scheduled to begin at 10:00
a.m. on Wednesday, May 3, 2006, in the main Committee hearing room,
1100 Longworth House Office Building, will now be held at 2:00 p.m.
All other details for the hearing remain the same. (See Health
Advisory No. HL-15, dated April 26, 2006).
Chairman JOHNSON OF CONNECTICUT. Good afternoon, everyone.
The hearing will come to order. Today, I am pleased to chair
this hearing on the Medicare drug benefit which is so
dramatically changing the lives of our seniors. Today, more
seniors and disabled people than ever before have prescription
drug coverage, and it is because of the Medicare drug benefit.
This is a momentous time in Medicare's impressive history. The
largest expansion of the program is improving seniors' access
to prescription drugs and thereby fundamentally improving their
health and their financial security.
The Medicare momentum we are witnessing is undeniable. Last
year, the Administration set a goal of having 30 million
Medicare beneficiaries enrolled in the drug benefit. Last
month, they tapped 27 million, and hundreds of thousands are
signing up weekly. In fact, just today, 27,382 new enrollees
have entered the Medicare drug plan. Of the remaining seniors,
there are another 9 million that already have drug coverage;
for example, those over 65 who are active employees in the
public and private sector, members of TRICARE or participants
in other programs. Seniors and the disabled are filing more
than 93 million prescription drug prescriptions a month, an
average of 3 million prescriptions a day. More importantly,
once enrolled, seniors are happy, happy with the benefits
provided. The Association for Advancement of Retired People
(AARP), the largest organization representing seniors, found
that 8 of 10 seniors enrolled in the program said that it met
or exceeded their expectations. A Kaiser Foundation poll finds
that 3 out of 4 seniors enrolled in the Medicare drug plan are
satisfied with their plan and are not having trouble getting
the drugs they need.
Seniors are giving this benefit their stamp of approval.
This is the largest benefit expansions in Medicare's history.
So, it is not surprising that there have been some
implementation pitfalls along the way. What is commendable,
however, is how quickly the Centers for Medicare and Medicaid
Services (CMS) has taken ownership of the problems and
addressed the issues within the first 2 months of the program's
functioning through close, collaborative, consultive action
with plans, pharmacists, States and other stakeholders. As the
program matures, it will need continued refinement, but
enrollment numbers and survey after survey show undeniable
momentum. The real story is how seniors across the country are
signing up and saving money. It is misleading to focus on only
the refinements, however, when seniors like Gail Blazewski from
Cheshire, Connecticut is saving $2,000 a year. That is the real
story that the Medicare prescription drug benefit is telling
across the country.
I ran into a senior in my district recently who said to me
Part D is the difference between my staying in my home and my
not being able to stay in my home. I can't tell you how
grateful I have been for the work of the Congress and the work
of the executive branch and their many, many partners all
across the country, as I have seen senior after senior breathe
a huge sigh of relief as the pressure of prescription drug cost
is taken from their shoulders. I commend CMS for such a broad
coalition of senior and advocate groups working to help seniors
sign up. The AARP fielded a multimillion, quote, Reach
Campaign. The National Association for the Advancement of
Colored People (NAACP), the Nation's oldest civil rights group,
not only launched a media campaign but an intense grassroots
efforts to reach minority seniors and enroll minority seniors.
Today, 70 percent of minority seniors are signed up, not just
in the black community, but in the Hispanic community and in
the Asian community.
CMS has 10,000 grassroots partners, and they have been
conducting 1,800 enrollment events across the country each week
and will do so right up to May 15, 2006. Additionally, CMS has
increased resources to keep the wait times down and beneficiary
support up at 1-800-Medicare and Medicare.gov website. To that
end, I am very pleased to welcome Dr. Mark McClellan,
Administrator of CMS. I appreciate, Dr. McClellan, how
thoughtfully and effectively CMS has worked to implement this
program. I commend your decision to join forces with thousands
of partners across the country, frankly, an unprecedented
public-private partnership in the history of my experience of
Federal Government over many years. I appreciate the dedication
of you, the employees at Medicare, the employees in the public
and private sector, and all the volunteers who made it possible
for so many seniors to sign up.
I look forward to your report made on the progress of the
implementation of Medicare Part D benefit, the solutions found
to the problems you encountered, the efforts you have made to
prepare for the 2007 general enrollment and also the next
steps, because Medicare Part D wasn't brought in to be part of
Medicare just because we wanted to expand the benefit program,
as important as that expansion. Medicare Part D will mature at
the same time our knowledge of our chronic disease management
demonstration projects mature and at the same time, we will
have implemented a great number of preventive health benefits,
and that is going to enable us to take some very important next
steps. I would like to hear your comments on that future as you
conclude your remarks. Also, on the first panel is Beatrice
Disman, Chairman of the Medicare Planning and Implementation
Task Force at the Social Security Administration (SSA). The SSA
has also addressed this issue with remarkable care, remarkable
teamwork and remarkable outreach, and I appreciate your hard
work and look forward to your report on how you are reaching
the low-income seniors who are the most vulnerable and the most
in need of good prescription drug coverage.
On the second panel, Susan Everett, North Carolina Regional
Coordinator, Medicare Today, a partnership of more than 400
organizations, will testify to their efforts to inform seniors
and enroll them in the new benefit. Susan will share
experiences with working one on one with seniors enrolling on
the new benefit. Next, we will hear from Heath Schiesser,
President, Prescription Drug Plan, WellCare Health Plans, Inc.
WellCare Health Plans, Inc. is offering three different
prescription drug plans in all 50 States. He will speak to the
role competition has played in providing high-quality benefits
at a lower cost for seniors and taxpayers.
Also, Robert Hayes, President of the Medicare Rights
Center, a consumer rights organization, will share his
experiences with assisting seniors in enrolling in the Medicare
drug benefit, especially those that could benefit from the low-
income subsidy. Then, we will hear from Bill Wolfe, Vice
President, Managed Care, Rite Aid Corporation, who will speak
to the operations of the Medicare drug benefit since January
and the actions that CMS has taken to facilitate this process.
Finally, we will hear from Pam Grisnik, Owner, RX Express,
Grove City, Pennsylvania. She will speak on the role of
community pharmacists and the important role they have played
in this new benefit. There are still seniors that have
questions about the program and haven't enrolled. It is natural
to have questions with a change this big. Every senior,
especially those without drug coverage, should write down the
drugs they take and talk to a counselor at 1-800-Medicare or at
one of the many hotlines States are operating or at the local
senior citizens center or Area on Aging.
They should not let questions about this program keep them
from finding answers and saving money, like so many of their
friends, family and neighbors. For years, Members of Congress
talked about adding prescription drug benefits to Medicare.
Today, right now, a Medicare prescription drug benefit is a
reality. Thirty million seniors are benefiting from it,
including 8 million who had no drug coverage before. This is a
great, historic achievement for both the health and financial
well-being of the seniors of America. Welcome, Dr. McClellan.
Excuse me. First let me turn to Pete Stark, and then I will
come to Dr. McClellan.
Mr. STARK. Thank you, Madam Chair. I am glad we finally got
to holding this hearing and hope that we have the time to get
into this question thoroughly. The Medicare Prescription Drug
Program (PDP) is now forecast to cost us $1 trillion over the
next decade. I hope today we could look at what we have gotten
for our money, and I suspect you will find that we haven't
gotten very much for that $1 trillion. CMS will declare a
victory when they tell us that more than 30 million people now
have prescription drug coverage through Medicare or through a
former employer and that nearly 6 million more are covered
elsewhere. They won't tell you that they have lowered the goal
from 40 million, reduced it by 10 million to 30 million, so
that they can claim success.
I understand that Dr. McClellan, today, is going to declare
normal at 103 million, and therefore, many of the seniors who
were classified as sick are called instantly well. The
``mission accomplished'' that will be quoted from the deck of
CMS is premature. As a matter of fact, I wondered where all of
those people who counted weapons of mass destruction went when
they were kicked out of the Defense Department, and there they
are in CMS, finding out how many signed up in this drug bill.
With fewer than 20 million enrolled in Part D and an additional
6 or 7 million in an employer plan subsidized by Medicare, some
people have been newly covered under the law, and that is good.
After all, it would be virtually impossible to spend the $1
trillion and not help anyone.
I am very concerned that we have created this enormous,
complicated, inefficient program that has eroded coverage for
many of our most vulnerable and still not achieved the original
goal of securing coverage for all. Millions of people covered
by Medicare and Medicaid, the so-called dual eligibles, pay
more today and are in plans that cover fewer medications
relative to Medicaid. These are the people who are least able
to afford this benefit reduction and that, to me, is not a very
kind thing for us to be doing with the $1 trillion. A recent
survey by the Medicare Prescription Network, a group financed
in part by the pharmaceutical companies, found that one out of
five Medicare beneficiaries now pay more for their medication
than they did before the law went into effect.
I can't say that I am surprised, that is what happens when
you negotiate a law in secret, and follow the bidding for
pharmaceutical industries is payback for campaign
contributions. Unless you think I am entirely negative, I do
want to take this opportunity to compliment CMS for several
recent improvements. They have extended the enrollment deadline
for people who are eligible for limited-income subsidies. They
have also prohibited planned formulary changes from affecting
medications their enrollees are currently taking. These are
important changes. They will help, but more is needed.
I realize the Chair and others are not ready yet to do what
we really need, and that would be a drug benefit in Medicare
that would require the government to negotiate lower prices for
the beneficiaries, just as we do for veterans today. That is
why today I think we should only focus on a modest change, and
that is to delay the May 15, 2006 enrollment deadline and the
corresponding financial penalty. It is something we should all
be able to agree on. It is something which we on the other side
of the aisle would give complete credit to the Republicans for
accomplishing, and I assure you we would have no problem with
extending that under what we believe is the authority that CMS
has to do this administratively.
We will be told by CMS that the May 15, 2006 deadline is
important, because healthy people won't enroll without a
deadline. I agree that a deadline at some point is necessary,
but May 15 just doesn't seem to be the appropriate date, given
all the confusion, the complexity, and the errors. For example,
the Government Accountability Office (GAO) report--and, Madam
Chair, I would like to make the GAO report that was released
this morning a part of the record. We had hoped that they would
be here to testify, but we could put their report in the
record.
Chairman JOHNSON OF CONNECTICUT. If the gentleman would
yield, I would be happy to include their report in the record.
Unfortunately, they could not brief us on it before, which is
why they didn't testify. They have to have the authority of
those who asked for the report in order to brief others on it
before they are released. You all know not to do that. I am
happy to have it put in the record, and I am sure that we will
all have our reasons to refer to it.
[The information is being retained in the Committee files.]
Mr. STARK. Sure, one of the things that they have showed is
that for the people whom you have suggested call these numbers,
that when people asked for the lowest costs, given a certain
list of drugs, in 60 percent of the cases, 43 percent of the
calls were unanswered or they received inappropriate responses,
and 16 percent were inaccurate. That is a 60 percent failure
rate. Of all the calls that they monitored, one-third of the
beneficiaries received no answer, an answer that was
incomplete, inaccurate or inappropriate. I don't think that is
a record that we should rely on to adequately inform our
seniors. These are fundamental tools that they need to guide
them in the decision-making process. They certainly weren't
adequate to let Secretary Leavitt's father make the right
choice, and that hits pretty close to home.
The government, the Congressional Budget Office (CBO), has
told us that the change we are asking would cost $2 billion
over 5 years. In a $1 trillion program, that is chump change;
and it would, in fact, increase this year's enrollment,
according to the CBO, by about 1 million people and reduces the
penalties for 7.5 million beneficiaries that they would pay
over their lifetime--that penalty comes to the Treasury, so
that would be no additional funding for the pharmaceutical
industry, who would get 1 million more people to sign up. To
me, that is a win-win. Nobody gets harmed. We pay a little more
money to include these 1 million people and reduce the tax on
7.5 people. It seems to me that would be money well spent. I
would also in conclusion, Madam Chair, like to ask unanimous
consent that some of our full Committee, non-Subcommittee
members, be allowed to participate in today's hearing.
Chairman JOHNSON OF CONNECTICUT. I would be happy to have
them participate after the Subcommittee members and if it
doesn't exhaust the witnesses' time; if the witnesses' time
isn't exhausted by the Subcommittee members.
Thank you, Mr. Stark. As I recognize Dr. McClellan, let me
just note that, Pete, in your district, 83 percent of the
seniors were signed up by the middle of April. In my district,
only 62 percent of the seniors were signed up by the middle of
April. I clearly have a lot of work to do, but I am glad to see
that 83 percent of yours are signed up.
Mr. STARK. If the gentlelady would yield, half of the
people who belong--live in my district--belong to one plan,
Kaiser Permanente. So, they were automatically switched. That
is sign A.
Chairman JOHNSON OF CONNECTICUT. That is great. You will
also see as we start this hearing, a chart that shows the
number of eligible Americans signed up for other kinds of
subsidy programs, Medicaid, food stamps, Slimby, Quimby, the
Earned Income Tax Credit, just so we can put into context the
achievement that has been accomplished in 125 days in regard to
signing up seniors into the Part D subsidy. Dr. McClellan.
STATEMENT OF MARK McCLELLAN, M.D., Ph.D., ADMINISTRATOR,
CENTERS FOR MEDICARE AND MEDICAID SERVICES, U.S. DEPARTMENT OF
HEALTH AND HUMAN SERVICES
Dr. MCCLELLAN. Thank you very much, Chairman Johnson, Mr.
Stark. Chairman Johnson and all Members of the Subcommittee, I
appreciate the opportunity to update you on the new Medicare
prescription drug coverage and especially the steps that we are
taking to help people enroll as we enter the final days of the
open enrollment period.
I want to thank my colleague, Bea Disman, and all of the
staff at the SSA who have been working diligently to help our
most vulnerable beneficiaries take advantage of the extra
assistance in this program and who have collaborated with us
every step of the way. I also want to take this opportunity to
thank all of you who have participated in counseling and
enrollment events across the country. I am very grateful for
your personal assistance in driving awareness of Part D and
helping millions of beneficiaries enroll in drug coverage to
get savings and protection for the future.
Members of Congress have been an important part of our
massive grassroots education effort, and I want this
partnership to continue as we now begin to drive more effective
use of Medicare's new preventive benefits and the drug
coverage. This is the next step, Chairman Johnson, in turning
Medicare from a traditional indemnity insurance program into a
program that partners with our beneficiaries to improve their
health and prevent unnecessary health care costs.
Millions of seniors and people with disabilities are
already using this money to stay healthy, to gain peace of
mind. Approximately more than 9 million beneficiaries have new
individual prescription drug coverage since the program began.
Several million individuals who, because they also qualify for
Medicaid or the low-income subsidy, will also have low or no
premiums in deductibles and cost-sharings, and many millions
more have more extensive and more secure drug coverage building
on the coverage they already preferred as a result of the drug
benefit.
CMS estimates that almost 270 million prescriptions were
filled under Part D during the first 3 months of 2006 for all
of our beneficiaries with drug coverage, and numerous surveys
show high rates of beneficiary satisfaction with their
coverage.
Each week, hundreds of thousands of more beneficiaries are
enrolling. We have already exceeded the initial enrollment
expectations with more than 30 million beneficiaries with
coverage, through Part D or a former employer, as of mid-April.
In addition, almost 6 million Medicare beneficiaries get
drug coverage equal to Medicare's from other sources such as
the Veterans Administration, and we want to work hard over the
coming days to reach as many of the remaining 6 million. As
close as possible. That is close to 96 percent of all Medicare
beneficiaries. Half of those remaining are beneficiaries with
limited incomes who we will continue to reach in the months
ahead with expanded partnerships with SSA and outside
organizations.
We have worked with the plans, the pharmacists, the States
and hundreds of other partners around the country to educate
beneficiaries and their caregivers about their choices, to help
people understand how to make decisions based on cost,
coverage, convenience, and peace of mind. We put in place many
outreach resources to support these efforts.
While the vast majority of beneficiaries are already
getting the savings security of drug coverage, again, we are
working to reach as many more as possible between now and May
15, and that would put us at the 90-percent-or-above range,
with many of those left having continuing opportunities to
enroll.
To spread out any last-minute rush to enroll, CMS and our
partners are undertaking a major effort to encourage
beneficiaries to take advantage of the assistance now. In the
past month, there have been more than 1,900 events per week
across the country to provide beneficiaries with personalized
help so they can understand their coverage options and make a
confident decision about enrollment.
Not only is enrollment way up, costs are down and benefits
are better than expected as a result of competition.
Beneficiaries are able to enroll in plans that meet their needs
far better than a one-size-fits-all benefit package and a
single drug formulary could do. The result is coverage that
serves beneficiaries well and costs less.
Over 90 percent of beneficiaries have opted for plans other
than the standard statutory benefit design. They have enrolled
in plans with low or no deductibles, flat copayments for
covered drugs, and in many cases, coverage through the coverage
gap.
Consequently, even though the new drug coverage is offering
better benefits, it is costing much less for beneficiaries,
taxpayers, and States than had been anticipated. The passage of
the Medicare Modernization Act (MMA) (P.L. 108-173), the
creation of the prescription drug benefit, posed some real
changes for us in awareness, education and operational
implementation that are unprecedented in scale and scope since
the onset of the Medicare program 40 years ago.
Before implementation of the drug benefit, we provided most
information directly to beneficiaries using traditional tools,
including the Medicare and You handbook, 1-800-Medicare and our
Web site, medicare.gov. Now, these are important pieces of
information, but with the passage of the MMA we saw a need to
improve and diversify our tools and to develop new strategies
to reach a wider audience and to target hard to reach
populations, including rural areas and minority communities.
In addition to print, radio, and television advertisements,
we have a multipronged approach to raise awareness and assist
beneficiaries and their caregivers in making decisions about
prescription drugs.
During 2004, we began reaching out to develop partnerships,
and now we have a network that is incredibly diversified and
committed, with more than 10,000 local partners. For several
months, we held training sessions around the country to educate
our partners about the benefit structures and the enrollment
tools so that they could help us raise awareness and educate
enrolled beneficiaries.
We recognize that to achieve the promise of the MMA we need
to reach all segments of the Medicare population, especially
underserved populations and those with language and cultural
barriers. To reach them, including minority, low income,
limited English-speaking, rural and homebound populations, we
entered into a contract with the National Association of Area
Agencies on Aging. Our strategies included strategy with
community network-based organizations and nine national aging
organizations with local affiliates to conduct outreach to low-
income populations.
We developed specialized campaigns for the African
American, Hispanic, American Indian and Asian American, and
Pacific Islander communities, using new partnerships, creating
materials in other languages, and doing specialized, targeted,
paid media campaigns.
We are pleased that this is paying off with enrollment in
minority populations that is running ahead of the national
average. I think that is probably unprecedented.
We appreciate your participation in outreach, and we
welcome your continued involvement as we work to reach
remaining beneficiaries. Altogether we have hosted over 22,000
events since January. Chairman Johnson, as you mentioned this
extensive grassroots-level partnership is unprecedented. There
are many people all over the country, where they live and work
and play and pray. It has enabled us to reach beneficiaries who
otherwise might not have gotten the support they needed to
enroll, and it has helped millions make a decision about
Medicare coverage already.
It has helped personalize Medicare in a way we could never
do from our national offices. I think this will be a lasting
and fundamental change in the way that Medicare works.
I do want to spend a minute talking about the importance of
our customer service and support. It is always a top priority
at CMS to ensure that beneficiaries and our partners get
accurate and timely information. We have handled more than 22
million calls between November 15 and April 24 of this year,
and the agency takes great care in answering these calls
promptly and providing accurate and useful information to
callers. That is why we have ongoing and extensive and
continuous monitoring improvement activities to make sure we
are providing the most effective customer support possible.
We have worked diligently to improve the wait times and to
ensure accurate information is available in a timely manner to
those seeking assistance. We have ongoing monitoring programs
of actual beneficiary calls, which evaluate a random sample of
hundreds of actual calls on an ongoing basis every month. It
has found that calls to 1-800-Medicare in 2006 have been
answered accurately 93 percent of the time. Actual calls, 93
percent of the time answered accurately.
This high accuracy rate is reflected in the high rates of
overall satisfaction from 1-800-Medicare callers. We also do
regular contact and follow up with a random sample of the
beneficiaries who actually call us. I am pleased to say that
CMS customer satisfaction surveys indicate that of the bulk of
callers who interact with our customer service representatives,
87 percent are satisfied with their experience.
Our Web site, medicare.gov, has also been visited more than
829 million times in the past 4 months. Many consumer experts
like Consumer Reports, Jane Bryant Quinn, and Terry Savage of
the Chicago Sun-Times all recommend using medicare.gov as a
useful tool to get information about drug plans.
With this array of tools available, and the incredibly
diverse and unprecedented scale and scope of our outreach
activities around them, I am confident that we can reach more
beneficiaries than have ever been possible before to help them
take advantage of Medicare benefits.
Now, I would like to make special mention of the pharmacy
community before I conclude. They are the linchpin of the drug
benefit and have been tremendous in helping us. We are working
hard to meet the demands of this new program, and so we will
continue to take steps to support pharmacists, like supporting
the creation of new computer standards and new approaches to
recognizing and promoting high-quality pharmacy services.
I want to thank you again for the opportunity to discuss
our progress during the first 4 months of the drug benefit.
This has been a very exciting time for CMS, as we now have many
new and important relationships that we are going to continue
to strengthen for future outreach and education aimed at
continuous improvement and the quality of care and health for
the Medicare population.
While we are pleased that millions of Medicare
prescriptions are being filled every day now, we will continue
to work to ensure every person with Medicare can use this
coverage effectively.
I am happy to answer any questions you may have.
Chairman JOHNSON OF CONNECTICUT. Thank you, Dr. McClellan.
[The prepared statement of Dr. McClellan follows:]
Prepared Statement of The Honorable Mark McClellan, M.D., Ph.D.,
Administrator, Centers for Medicare and Medicaid Services,
U.S. Department of Health and Human Services
Chairman Johnson, Representative Stark, distinguished Members of
the Subcommittee, thank you for the opportunity to update you on the
new Medicare prescription drug coverage, and especially the steps we
are taking to maximize enrollment as we enter the final days of open
enrollment period. I also want to address the steps that we are taking
concerning preparations for 2007 to make the prescription drug benefit
program even better. I want to take this opportunity to thank those of
you who have participated in CMS' enrollment events throughout the
country. I appreciate your interest in this topic, but more importantly
I am very grateful for your personal assistance and that of many of
your colleagues in driving the awareness of and enrollment in Part D.
Members of Congress have been an important part of this massive
grassroots education effort and I am very hopeful that this partnership
we have created can continue as we begin to drive greater awareness and
use of the prevention benefits which the Congress included in the
Medicare Modernization Act (MMA).
More than 8 million beneficiaries have new individual prescription
drug coverage since the program began and more than 93.8 million
prescriptions were filled for these beneficiaries with drug coverage
during March--averaging 3 million prescriptions filled per day. The
vast majority of beneficiaries are using their coverage effectively and
each week hundreds of thousands of beneficiaries are enrolling in the
new program. CMS has already exceeded the enrollment target with more
than 30 million beneficiaries with drug coverage through Part D or a
former employer as of April 18, 2006. In addition, almost 6 million
Medicare beneficiaries get drug coverage from other sources with
prescription drug coverage such as the Department of Veterans Affairs
equal to Medicare. This brings the total to approximately 36 million
Medicare beneficiaries who are now receiving prescription drug
coverage.
According to data collected through beneficiary satisfaction
surveys, 84 percent of seniors enrolled in the Medicare prescription
drug program are satisfied with their coverage and 52 percent say they
are enjoying significant cost savings.\1\ Further, a U.S. Chamber of
Commerce study shows that 85 percent of enrollees say their plan covers
the medicine they need and a study conducted by the Kaiser Family
Foundation reveals that 82 percent of enrollees who have filled a
prescription under the benefit reported having no problems.\2\
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\1\ U.S. Chamber of Commerce, April 25, 2006.
\2\ Kaiser Family Foundation, April 25, 2006.
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CMS worked with the plans, pharmacists, States, and hundreds of
other partners leading up to the start of the drug benefit to educate
beneficiaries and their caregivers about the their choices and to help
people understand how to make decisions based on cost, coverage,
convenience, and peace of mind. There are still twelve more days to
enroll before the May 15, 2006 enrollment deadline for the year, and we
need to help beneficiaries get the savings and security of prescription
drug coverage now.
We have put into place many outreach resources to get the
information to beneficiaries so they can enroll. To minimize an
anticipated last minute rush to enroll, CMS is making a monumental
effort to enroll beneficiaries as soon as possible. In the last month,
there have been more than 1,880 events per week across the country to
provide beneficiaries with personalized help so they understand the
prescription drug coverage options available to them and so they can
enroll in a plan. I know that you and other Members of Congress have
been very helpful with events in your district as well. I have
personally contacted many of the high enrollment plans to express my
concern that they put adequate resources into their call centers.
However, we know there will be a large number of enrollments as the May
deadline approaches. While this may lead to longer wait times on both
our call lines and plan sponsor lines, we have worked with the plans
and we will make every effort to enroll everyone who wants to enroll.
But to minimize problems, you should encourage your constituents to act
now.
Millions of seniors and people with disabilities are already using
this benefit to save money, stay healthy, and gain peace of mind. This
includes several million individuals who, because they also qualify for
Medicaid, or the low-income subsidy (LIS), will have very low or no
premiums deductibles and cost sharing. CMS estimates that almost 270
million prescriptions were filled during the first three months of 2006
for all Medicare beneficiaries with drug coverage. Because of strong
competition in the prescription drug marketplace, there has been slower
growth in prescription drug inflation in recent years, due in part to
increasing generic drug availability. Also, the proliferation of tiered
co-payment drug plans and use of formularies have caused the use of
generic drugs to increase and further slow drug spending growth.
Consequently, the new Medicare prescription drug coverage is costing
much less for beneficiaries, taxpayers, and the States than
anticipated.
Beneficiaries are choosing plans that best meet their needs,
leading to coverage that serves them well and costs less for them and
for taxpayers. Enrollment data reveal that the vast majority of
beneficiaries are choosing plans that offer benefits other than the
standard option as defined in the law. They are choosing plans that
have low premiums, no deductibles, fixed copays, and coverage in the
gap. In fact, only 16 percent of prescription drug plan (PDP) enrollees
chose the standard, statutory option and only 5 percent of Medicare
Advantage prescription drug plan (MA-PD) enrollees chose the standard
option. Beneficiaries are also often choosing plans with access to a
broad range of drugs. Beneficiaries eligible for the low-income subsidy
have a very comprehensive benefit, with no coverage gap and usually no
deductible.
CMS anticipates that plan sponsors will consider current enrollment
statistics when submitting their bids for 2007, and will limit their
plan options accordingly. CMS' expectations for plan bids are outlined
in the 2007 Call Letter, which I will discuss shortly.
We are hearing reports from our partners about the cost savings
people with Medicare are experiencing. It is estimated that the
Medicare drug benefit will pay on average about half of total drug
spending in 2006 for seniors who are not eligible for extra help.
The beneficiaries who qualify for the low-income subsidy receive
substantially greater assistance, with a benefit that will cover on
average over 95 percent of their drug costs.
CMS and Our Partners have Raised Awareness Nationwide
With the passage of the Medicare Modernization Act of 2003 and the
creation of the Medicare prescription drug benefit, the Congress posed
awareness, education, and operational challenges to CMS unprecedented
in scale or impact since the onset of the Medicare program more than
forty years ago. Notwithstanding a short timeline, CMS has risen to the
challenges as evidenced by the most recent enrollment numbers, which
exceed our target. With the outstanding help of our partners, CMS has
instituted a grassroots initiative across the country, with
partnerships which we believe will last long after the May 15th
enrollment deadline. We have an extensive partnership network with more
than 10,000 local partners including senior organizations and centers,
youth groups, churches, civic and social organizations and federal
state and local government agencies.
Before implementation of the drug benefit, CMS provided most
information directly to beneficiaries using the traditional tools,
including the Medicare & You Handbook, 1-800-MEDICARE, and
www.medicare.gov. However, with the passage of the MMA, CMS saw the
need to improve our existing tools and to develop new strategies in
order to reach a wider audience and to target specific hard- to -reach
populations, including rural areas and minority communities. In
addition to print, radio and television advertisements, CMS has a
multi-pronged approach to raise awareness and assist beneficiaries and
their caregivers in making decisions about prescription drug plans.
CMS knew from the outset that it was essential to provide
beneficiaries with more hands -on assistance than was available in our
traditional educational materials through outreach events and one-on-
one training. This effort would have to be both a high-touch and high-
tech outreach campaign, with high-tech resources like the personalized
Plan Finder web tool for use by our partners and our beneficiaries, as
well as high-touch efforts involving one-on-one personal contacts using
an intricate web of grassroots partners collaborating and leveraging
each other for the maximum benefit of people with Medicare.
In addition, rather than just reaching beneficiaries, CMS cast a
wider net to reach caregivers, family and friends of beneficiaries.
During 2004, CMS began reaching out to develop partnerships, and
now the network is incredibly diverse and committed. For several
months, we held training sessions throughout the country to educate our
partners about the benefit structure and the enrollment tools so they
could help raise awareness, educate, and enroll beneficiaries. CMS
provided special training for social service coordinators to help them
counsel low-income seniors. CMS relied heavily on our partner
organizations to work with beneficiaries on a one-on-one basis.
President Bush, Secretary Leavitt, and I, along with CMS' regional
office staff, have traveled over 500,000 miles across the country in a
mobile office bus to form grassroots partnerships that help people with
Medicare make an informed decision about prescription drug coverage.
About 70 percent of these mobile office stops have taken place in rural
communities throughout the country. Many Members of Congress have
served as honorary chairs for these events and we appreciate their
involvement in forging over 240 grassroots community and statewide
networks, each led by a community partner. The mobile office reached
rural areas across the country to complement our dedicated funding for
outreach to rural areas. Since January 1, 2006, 269 events have
involved the participation of an elected official. We appreciate your
participation in outreach and we welcome your continued involvement in
activities to reach beneficiaries.
We have continued to work harder than ever to help beneficiaries
and their loved ones learn about their drug coverage. Since January,
CMS and its partners have hosted over 22,000 events. Our partner
organizations are also providing personalized counseling by request to
help beneficiaries enroll in a plan that best meets their needs. CMS
worked with the Social Security Administration and various
organizations to provide training and conduct outreach to beneficiaries
who may qualify for low-income assistance. In addition, we forged
partnerships with other federal agencies, which have helped to
disseminate information to beneficiaries, especially to those who might
qualify for the low-income subsidy.
Also, CMS regional offices along with State Health Insurance
Assistance Programs (SHIPs), senior advocacy organizations, and
agencies on aging have held thousands of information and enrollment
events. In fact, CMS has more than doubled its funding to SHIPs since
2003, recognizing the importance of SHIP assistance to beneficiaries.
In 2004, CMS provided more than $21 million and increased that to more
than $31 million in 2005. The funding level will remain high, even
after the initial enrollment period for prescription drug coverage
ends, to ensure that SHIP counselors will continue to play an important
role in educating beneficiaries about the drug benefit and their plan
options in the months ahead.
We recognized that to achieve the promise of the MMA we would need
to reach all segments of the Medicare population, especially
underserved populations and those with language and other cultural
barriers. To target these hard to reach populations, including
minority, low-income, limited English-speaking, homebound, and rural
populations, CMS has a contract with the National Association of Area
Agencies on Aging. Strategies included contracting with Aging Network
community-based organizations and nine National Aging Organizations
with local affiliates to conduct outreach to low-income populations.
Thus, we developed specialized campaigns for the African American,
Hispanic, American Indians, and Asian American Pacific Islander
communities, utilizing new partnerships, creating materials in other
languages, and doing specialized paid media campaigns.
In summing up a new set of outreach initiatives for African-
American beneficiaries, Dr. Sandra Gadson, president of the National
Medical Association, has described the importance of this targeted
outreach to specific populations such as African American
beneficiaries. ``If we think we have a health disparity crisis in the
African American community today, imagine if we do not succeed in
enrolling the most needy of our eligible seniors and people with
disabilities.'' She noted that many of the organizations she was
working with had not supported the law, but that it was clearly time to
put politics aside in helping people take advantage of the new coverage
. . . coverage that for low income seniors, as Jim Firman, of the
National Council on Aging has said, is the most important new health
care benefit in 40 years.
These extensive, grassroots-level partnerships are truly
unprecedented for the Medicare program. We are reaching out to people
with Medicare, many people, all over the country . . . ``where they
live, work, play, and pray.'' It has completely changed awareness about
the drug benefit, and has helped millions make a decision about
Medicare coverage already. It has helped personalize Medicare in a way
that we could never do from our national offices. And I believe this
will be a fundamental and lasting change in the way that Medicare
works. This has been a very exciting time for CMS as we now have many
new important relationships which we will continue to nurture for
future outreach and education efforts aimed at continuous improvement
in the quality of health of the Medicare population.
In addition to events around the country, we have worked to enhance
our traditional methods of outreach and education. For instance, CMS
treats the Medicare & You 2006 handbook, which is mailed to all 42
million beneficiaries and includes detailed information about the new
prescription drug coverage, as a continuous quality improvement
project. Every year, in an effort to make the handbook a valuable and
understandable beneficiary resource that is straightforward and easy to
read, CMS conducts consumer testing of the draft handbook at two
separate stages. Additional testing is sometimes done for specific
sections. CMS also solicits input from our partners, including Members
of Congress.
CMS Prioritizes Customer Service to Our Beneficiaries and Our Partners
As always, customer service is a priority at CMS to ensure
beneficiaries and our partners are given accurate, timely information.
With implementation of a brand new part of Medicare, CMS understands
that people with Medicare, their families, doctors, and pharmacists
will have questions about the new Medicare drug benefit. CMS' 1-800
MEDICARE Call Center has customer service representatives (CSRs)
available to answer Medicare questions 24 hours a day, seven days a
week with assistance in English and Spanish and many other languages as
well. CMS' helpline and www.medicare.gov have served as critical tools
for beneficiaries, caregivers, and enrollment assistance centers to
sign up for the prescription drug benefit.
CMS has handled more than 22 million calls between November 15,
2005 and April 24, 2006, and the Agency takes great care in answering
these calls as promptly as possible and providing accurate, useful
information to callers. Because of the great interest in the new drug
benefit, call wait times have been longer than we would like at times.
CMS has worked diligently to improve the wait times caused in part by
data translation problems to ensure accurate information is available
in a timely manner to those seeking assistance. As shown in Figure 1,
on average, callers have experienced wait times of less than two
minutes from January to mid-April, with longer waits sometimes
occurring during peak call periods.
Figure 1
[GRAPHIC] [TIFF OMITTED] T3132A.001
Figure 1: Call Volume and Wait Times to 1-800 MEDICARE
In order to help beneficiaries understand their drug plan choices
and select the plan that best meets their needs, CMS increased the
number of Customer Service Representatives (CSRs) from 3,000 in June of
2004 to as many as 7,800. We have also acquired additional
infrastructure including telephone lines, workstations, and seats at
call center sites. We have refined our CSR scripts by reducing
redundant information, indexing scripts for quick access, and including
probing questions to help the CSRs better identify the caller's
concerns. In addition, all beneficiary toll-free numbers were moved to
a single 1-800 number with a centralized Interactive Voice Response
(IVR) system, allowing beneficiaries who call 1-800-MEDICARE to get
answers to all Medicare questions through a single number, which has
helped to channel calls appropriately and improve efficiency. Further,
the IVR system was enhanced to incorporate more plain language, user-
friendly functionalities, and synonyms for common beneficiary terms.
CMS has implemented a major enhancement through the use of Smart
Scripts, which provide the CSRs with an easily followed path of
responses to the most frequently asked questions. Smart Scripts are a
new type of script that has hyperlinks built into the body of the text.
When activated, these hyperlinks will take the CSR directly to related
information about that subject. In addition, we have CSRs participate
in the content workgroups for the actual development of scripts and job
aides. CMS has also implemented a CSR feedback system and streamlined
our approval process for updating the scripts in a timely manner to
respond to the changing needs of our customers or to incorporate policy
updates.
All CSRs receive one week of classroom training followed by two or
three additional days of practice calls, simulation, quality
monitoring, and follow-up coaching to ensure peak performance. CSRs are
required to be certified with a written examination and test calls
prior to taking live calls. CMS has taken steps to strengthen the call
centers' capabilities and reduce wait times in order to address
beneficiaries' concerns as they arise. CMS hired and trained additional
staff to use the Prescription Drug Plan Finder tool to help
beneficiaries get the information they need to enroll in a drug plan
that suits their needs.
I am pleased to say that CMS customer satisfaction surveys indicate
that the bulk of callers who interact with our CSRs, 87 percent, are
satisfied with their experience. They are particularly pleased with how
courteous and patient the CSRs are (rated at 97 percent). These
responses came not only from people with Medicare, but also friends or
relatives calling on their behalf, who made up 23 percent of callers
during March 2006.
In addition to beneficiary satisfaction surveys, CMS also evaluates
the 1-800-MEDICARE CSRs through ``mystery shopping'' to ensure they are
providing accurate and complete responses to callers. ``Mystery
shopping'' calls are made to CSRs by an independent specialized quality
evaluation contractor who has developed scenarios and scripts to
measure the CSRs on various topics to determine if CSRs are being
``fully responsive.'' A response is considered ``fully responsive'' if
all key points are conveyed to a caller. We have consistently found
that the information provided by the CSRs was fully responsive to the
caller's needs most of the time.
CMS' Medicare Web site, www.medicare.gov, has also been a source of
useful information for people with Medicare. Since the first of the
year, our frequently asked questions have been accessed more than one
million times. CMS also has responded to more than 19,000 e-mails
received through the site, with 93 percent of them being resolved
satisfactorily in the first response. In addition, the medicare.gov web
site has been visited more than 829 million times since January 1,
2006.
With the array of educational tools available, I am confident that
beneficiaries are getting the information they need to enroll. We have
seen steady enrollment since November 15th.
CMS Works With Plans To Improve Their Customer Service
In addition to this significant strengthening of our 1-800-MEDICARE
capabilities, we have issued guidance to the plans instructing them to
increase the numbers of CSRs in their own call centers and take other
necessary steps to provide timely and effective responses to inquiries
from enrollees and health professionals. Plans have responded and
reported significant increases in the number of CSRs in their call
centers, and as a result, plan performance has improved.
While many plans are now providing timely phone access, some have
not responded adequately. Therefore, CMS has increased monitoring of
plans' call center activities to help assure a high level of
performance. We are surveying all prescription drug plans to assess
whether they provide correct information to beneficiaries and
pharmacists within a reasonable time. We expect continuing improvements
as we address systems and data transfer issues. The 2007 Call Letter
provides specific wait time metrics to which the plans must adhere,
which I will outline shortly.
CMS Provides Caseworkers for One-on-One Counseling
While millions of prescriptions are being filled for people with
Medicare, CMS is very concerned about those individuals who are
encountering difficulties at the pharmacy counter. This is certainly
distressing for those individuals and their caregivers.
CMS has established a system to help resolve urgent issues on a
case-by-case basis. CMS has hundreds of trained caseworkers who are
working as rapidly as possible to resolve urgent issues to help ensure
that people with Medicare get their prescriptions filled. CMS urges
people with Medicare or their family members who are having
difficulties to call 1-800-MEDICARE, and if necessary, their case will
be forwarded to our caseworkers. Urgent cases have high priority for
rapid resolution.
While the number of individual cases is small in comparison to the
millions of prescriptions and individuals who are successfully
receiving their prescriptions, CMS is committed to ensuring that every
individual receives his or her needed medicines, is properly
identified, and is charged the appropriate copays.
CMS Takes Steps To Identify Areas of Concern
While considerable progress has been made, change of this magnitude
in such a short time span is bound to encounter some difficulties. CMS
is very concerned about anyone who has experienced problems in
obtaining their medicines. We make no excuses for the problems. They
are important, they are ours to solve, and we are finding and fixing
them. We have and are continuing to take action to address issues so
that all beneficiaries enrolled in a Medicare prescription drug plan
can obtain their medications without incident. CMS also has been
correcting data transmission problems between Medicare, health plans,
pharmacists, and the States.
CMS developed the Complaints Tracking Module (CTM) to capture
complaints CMS receives from beneficiaries, providers, or plans about
prescription drug plans, pharmacies, subcontractors, and providers. The
design of CTM evolved from CMS' experience with the Medicare-approved
prescription drug cards. Because it is a Web-enabled system, it can
accept large numbers of daily transactions simultaneously from many
users across the Agency. Information can be efficiently exchanged,
which allows for quicker resolution and accountability. CMS launched
the CTM into production October 3, 2005 and began tracking complaints
in January 2006 and we have seen a general decline in the number of
complaints during this time.
In addition, in order to assist pharmacists, who have been
outstanding in their commitment to service, CMS is working to ensure
they have the resources and support they need. CMS is also coordinating
with the States that used their state reimbursement systems to pay for
prescriptions that should be paid by the new Medicare prescription drug
plans. We are also monitoring plan activities and will use our
enforcement measures, if necessary, to ensure they are adhering to the
requirements of participating in the Medicare prescription drug
program. The 2007 Call Letter outlines CMS plan sponsor evaluation
criteria. These efforts build on the preparations that were made long
before the January 1, 2006 launch of the Medicare prescription drug
benefit. In addition, the 2007 Call Letter contains policy statements
developed in response to lessons learned during the Part D program
implementation. It also features reiteration of existing program
requirements to emphasize their importance to CMS and to our
beneficiaries.
CMS Applauds and Supports the Outstanding Work of Pharmacists
Pharmacists are the linchpin of the prescription drug benefit and
all over the country they have been tremendous in implementing the new
program. Traditionally, the start of a new year is one of the busiest
times for pharmacists with new enrollments occurring in commercial and
government plans in January. With the launch of the new Medicare
prescription drug benefit, the task facing pharmacists was an
additional challenge and CMS applauds and supports their tremendous
efforts. Pharmacists are working hard to meet the demands of the new
program, and CMS will continue to provide them and their software
vendors and support associations with the tools they need to serve
their customers.
CMS Provides Dedicated Support to Pharmacists
CMS has provided a number of ways for pharmacists to obtain help in
filling prescriptions for plan enrollees. To help pharmacists identify
what plan a beneficiary is in, CMS collaborated with pharmacists
starting in 2004 to create an electronic eligibility and enrollment
query system that operates as part of their existing computer systems.
If the enrollee does not have a card or proof of enrollment in a
prescription drug plan, pharmacists can use this eligibility system
(the E1 system) to obtain information needed to fill the prescription.
Using instructions and updates provided by their software vendors,
retail pharmacists now generally have the ability to perform real-time
eligibility determinations on their existing computer systems.
Pharmacists can also call plans directly, on lines dedicated for
pharmacists. They can contact Medicare's own CSRs on the toll-free
pharmacy support phone lines if need be, and CMS also has specially
trained case workers in our regional offices who can intervene in
special cases to make sure that enrollees get the medications they
need.
To help resolve issues pharmacists encounter in dispensing
medications to those newly enrolled in the Medicare prescription drug
plans, CMS has increased its call handling capacity at the pharmacist
help line. In addition, the line is now available 24 hours a day. This
increased capacity has reduced the wait time to less than a minute for
pharmacists who want to use this mode of communication for eligibility
and enrollment determination.
CMS Supports Simplification Initiatives
We have heard concerns from pharmacists about different claims
processing and administrative systems used by the various Medicare
prescription drug plans. We have helped make sure that plans are aware
of the challenges posed by their varying requirements. We have
supported external discussion efforts between plan and pharmacy
representatives to make rapid technical progress towards more
standardized electronic responses and prior authorization process for
the pharmacists. CMS remains supportive of this initiative undertaken
by the plans and pharmacists to improve how the new program operates on
a day-to-day basis. This is one of many examples of how various parties
are working together to improve the systems associated with the new
program.
CMS has also identified a number of business process issues that
can be simplified for plans, physicians and beneficiaries. To
supplement established prescription drug reject codes, America's Health
Insurance Plans (AHIP), the National Association of Chain Drug Stores
(NACDS), the National Community Pharmacists Association (NCPA), and
others have announced standardized coding messaging designed to assist
pharmacists and better serve beneficiaries when they fill prescriptions
at pharmacies. Specifically, these standardized electronic messages
will help pharmacists quickly determine the appropriate course of
action for filling beneficiaries' prescriptions under four different
circumstances: (1) when a particular drug is not covered; (2) when
prior authorization is required; (3) when plan quantity or other
coverage limitations have been exceeded; and (4) when the pharmacy is
not part of the Part D plan's network.
This consensus agreement on new message coding protocols will make
transaction processing more streamlined and efficient which will save
time and prevent phone calls and delays between plans and pharmacists.
This is important not only for the Medicare drug program, but may
produce benefits throughout our entire health care system, as these and
other protocols are applied to other public and private programs. CMS
now views these consistent messages as best practices for the drug
benefit, and we expect all Part D plan sponsors to adopt and implement
these practices as soon as possible. We will be looking at these and
other best practices as measures of plan performance.
To further the goal of simplifying procedures in the new drug
benefit, last week the American Medical Association (AMA) and America's
Health Insurance Plans (AHIP), in conjunction with CMS, released a
standardized exceptions form designed to assist physicians in
requesting exceptions and prior authorizations on behalf of Medicare
beneficiaries enrolled in Medicare drug plans. This form allows for a
simplified process for physicians to apply for coverage determinations
on behalf of all of their Medicare patients, regardless of which Part D
plan the beneficiary is enrolled in.
In addition to the new messaging standards, we sent information to
the plans which will expedite their processes for making sure they are
not inappropriately paying for drugs that should be covered under Part
B, and we have worked with Epocrates, an electronic prescribing
software company, to ensure that their product provides accurate and
easy access to plan formularies. We've also held weekly prescribers'
conference calls and bi-weekly meetings with the AMA and other
organizations to find out what prescribers are experiencing, to supply
them with information on our activities and answer their specific
questions.
CMS issued a fact sheet on February 24, 2006 to provide physicians
with updated, practical information about the exceptions and appeals
processes. This fact sheet describes the physician's role in these
processes and emphasizes the short decision-making timeframes. In
addition, on March 24, 2006, CMS held a ``Coverage and Appeals''
training session for providers and other CMS partners. We had close to
1,500 sites calling in for the training, and we conservatively estimate
that 3,000 people were listening in.
CMS Facilitates Creation of the Pharmacy Quality Alliance
CMS continues to engage in rigorous outreach to the pharmacy
community, through national, state and local pharmacy organizations and
their newsletters and email lists, as well as their standards
organization and technical societies.
I am very pleased to announce the establishment of the Pharmacy
Quality Alliance (PQA). Similar to the Ambulatory Quality Alliance
(AQA), the mission of the Pharmacy Quality Alliance is to improve
health care quality and patient safety, and to reduce overall
healthcare costs. The PQA will use a collaborative process in which key
stakeholders agree on a strategy for measuring performance at the
pharmacy level; collecting data in the least burdensome way; and
reporting meaningful information to consumers, plans, providers, and
other stakeholders to inform choices and improve health outcomes.
The Alliance highlights the role of the pharmacist as a member of
the integrated health care team and recognizes the value the pharmacist
can bring to the equation of total patient care. CMS may further
support this collaborative process by developing a demonstration
project to provide further evidence on the impact of Medication Therapy
Management (MTM) and other pharmacist interventions that could help
promote high quality patient care and lower costs in both the Medicare
and Medicaid programs--a win-win for plans, pharmacists, and most
importantly, beneficiaries.
Individuals with more than one chronic disease often require
treatment with several prescription medications, which increases their
risk for drug-related problems. Additionally, they represent a
disproportionate amount of health care expenditures. Each Part D
sponsor must have an MTM program for beneficiaries who have multiple
chronic diseases and are taking multiple Part D drugs with projected
annual costs of at least $4,000. The quality of care for these
individuals can be improved and medical costs can be reduced through
MTM, which promotes appropriate medication use, reduces the risk of
adverse events, and optimizes therapeutic outcomes.
MTM programs may be furnished by a pharmacist or other qualified
provider and must be developed in cooperation with pharmacists and
physicians. This creates opportunities for the pharmacists to play
active roles in the MTM services provided. To realize the full
potential of MTM, quality metrics for MTM and related pharmacy services
must be developed so that more can be done to support high-quality
pharmacy care.
Physician Outreach Provides Information about Formularies, Exceptions,
Appeals, and Expedited Requests
Physicians are a key partner in the implementation of the Medicare
prescription drug benefit, and CMS conducted extensive outreach about
formularies, exceptions, appeals, and expedited requests to promote
effective interactions with physicians and beneficiaries. CMS used the
Physicians Regulatory Issues Team (PRIT) web site to provide advice for
providers and an invitation for them to call or email CMS with issues
or concerns about the Medicare prescription drug benefit. In addition,
CMS sent a letter to physicians outlining specific sources of help and
information. Some specific steps we have taken to ease processes for
both physicians and pharmacists include the following:
A web-based formulary finder linked to all plan
formularies.
Information about Epocrates, an electronic handheld
and web-based drug and formulary reference for physicians, that
is providing plan formulary information including both tier and
step therapy information and is updated constantly.
An exceptions and appeals contact list for each
prescription drug plan so physicians can help a patient by
filing an exception or appeal for a medication or a
medication's tier.
Information about coverage determinations,
exceptions, appeals, and expedited requests.
AHIP, AMA and others developed a standardized form
that physicians can use to request prior authorization and
coverage for non-formulary drugs.
To facilitate communications between pharmacists and
physicians, we posted a form for pharmacists to use to inform
physicians that their patient's plan is requiring use of
another drug, step therapy, or prior authorization.
We have encouraged plans to accept prior approval
requests by fax, rather than requiring phone calls from
physicians, since that is less time consuming for the
physicians.
A chart and other support tools to determine quickly
if the drug a physician prescribed is a Part B or Part D drug.
Information about the CMS web-based email and weekly
conference calls where physicians can get direct help with
their concerns.
Strong Enrollment Trends Continue
As a result of successful outreach efforts, participation in the
drug benefit is off to a strong start. CMS has exceeded the enrollment
target and over 30 million beneficiaries have drug coverage from Part D
or a former employer. The number of Medicare beneficiaries receiving
coverage continues to grow at a rate of hundreds of thousands of
beneficiaries per week. As shown in Figure 2,
Overall prescription drug coverage figures as of April 18 are:
Stand-Alone Prescription Drug Plans (PDPs): 8.1
million people with Medicare have enrolled in stand-alone
prescription drug plans. This total includes 1 million
beneficiaries who had their enrollment facilitated by CMS. This
subset of beneficiaries were either automatically approved for
the low income subsidy or applied for the subsidy through the
Social Security Administration or states, but had not selected
a prescription drug plan on their own.
Medicare Advantage with Prescription Drugs (MA-PDs):
Nearly 5.8 million beneficiaries receive coverage through
Medicare Advantage plans with drug coverage (MA-PDs). More than
950,000 MA-PD beneficiaries have signed up on their own since
prescription drug coverage was added to Medicare Advantage
plans.
Medicare/Medicaid: About 5.8 million beneficiaries
were automatically enrolled in prescription drug plans, plus
about 500,000 enrolled in Medicare Advantage plans with
prescription drug coverage.
Retiree Coverage: More than 6.8 million retirees are
enrolled in an employer or union sponsored plan that has
applied for the Medicare retiree drug subsidy. In addition,
about 1.4 million retirees are in employer- and union-sponsored
coverage that incorporates Medicare group drug coverage.
Federal retiree coverage: 3.5 million
TRICARE: There are 1.9 million
beneficiaries with TRICARE retiree coverage.
FEHB: There are 1.6 million beneficiaries
with FEHB retiree coverage. This figure includes
spouses with Medicare who are covered under a FEHB
family policy by retirees who also have Medicare
coverage.
Additional Sources of Prescription Drug Coverage for
Medicare Beneficiaries:
Approximately 5.8 million Medicare beneficiaries
have alternative sources of ``creditable'' prescription
drug coverage:
Veterans Affairs (VA): There are
an estimated 3.2 million beneficiaries with
creditable drug coverage through the VA.
Indian Health Service (IHS):
There are an estimated 0.1 million
beneficiaries with creditable drug coverage
through the IHS.
Active Workers with Medicare
Secondary Payer: There are an estimated 2.0
million beneficiaries who are active workers
with creditable drug coverage through an
employer group health plan.
Other Retiree Coverage: An
estimated 500,000 retirees are continuing in
coverage from a former employer or union that
supplements individual market Medicare drug
coverage or is not coordinated with Medicare
drug coverage.
So, in addition to over eight million beneficiaries in stand-alone
prescription drug plans, many millions more are getting more
comprehensive coverage in Medicare Advantage plans, and millions more
continue to receive retiree coverage--exactly as the law was intended
to work.
[GRAPHIC] [TIFF OMITTED] T3132A.002
Figure 2: Enrollment in Medicare Prescription Drug Benefit, Medicare
Advantage-PDPs, the Retiree Drug Subsidy, FEHBP, and TRICARE
3, 4
---------------------------------------------------------------------------
\3\ MA-PDP enrollments are under-reported as plans update CMS
records concerning the movement of beneficiaries from MA to MA-PD
plans.
\4\ Retiree Drug Subsidy enrollment numbers between 12/27/05 and 1/
8/06 are estimates.
In addition to general participation, CMS research indicates that
our partners' and our outreach efforts have been particularly
successful in minority communities. Seventy percent of Medicare-
eligible African Americans, 75 percent of Asians, and 70 percent of
Hispanics have enrolled in Part D or have coverage from an employer
taking the retiree drug subsidy. These figures exclude FEHB and
TRICARE.
Polls show that people are finding the enrollment process easy and
are saving money from participating in the benefit. An AARP survey
found that 78 percent of those enrolled in a Medicare prescription drug
plan say they are satisfied.\5\ An AHIP survey released on March 13,
2006 found that nine out of 10 seniors who are dually eligible for
Medicare and Medicaid say they have experienced no problems using the
new Medicare drug benefit.\6\ According to AARP's survey, of those
surveyed who had prescription drug coverage before 2006, 63 percent
indicated that their Medicare drug plan is either better or as good as
their previous coverage. Further, the survey found that 40 percent of
survey participants thought if Medicare had not added the new
prescription drug benefit, they would need to give up things such as
groceries, full dosages of medication, or cut back on savings.
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\5\ ``New Medicare Drug Benefit is Meeting or Exceeding
Expectations,'' AARP, Released April 12, 2006.
\6\ ``Tracking Survey of Seniors Who Are Enrolled in the Medicare
Prescription Drug Benefit,'' AHIP, Released March 13, 2006.
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More than 30 million Medicare beneficiaries now have prescription
drug coverage and CMS is encouraged by the strong enrollment numbers.
Outreach efforts will continue to promote enrollment for those who have
not yet enrolled.
Competition Helps Lower Drug Prices
Competition in the prescription drug marketplace and among sponsors
of Medicare prescription drug plans have helped reduce prescription
drug costs for Medicare beneficiaries, which a number of recent studies
have illustrated.
CMS analyses demonstrate that Medicare beneficiaries with common
chronic conditions can save a substantial amount on their drug bills by
enrolling in a Medicare prescription drug plan (PDP) compared to what
they would pay with no drug coverage.\7\ For instance, people with
Medicare who select the lowest-cost plan in their area may find savings
up to 71 percent off the prices they would pay without prescription
drug coverage. The analysis also demonstrates that a range of plans
available to beneficiaries can provide significant savings. This is
also true for a very broad range of plans if beneficiaries are willing
to use generic versions of their existing drugs, when available, which
are required to have the same active ingredients and work in the same
way as the brand-name drug. These results indicate that beneficiaries
can see substantial savings on their drug bills by focusing on a few
plans with the features they prefer--such as a low premium, or fixed
copayments, or coverage in the gap, and low out-of-pocket costs.
---------------------------------------------------------------------------
\7\ CMS Office of Policy, Analysis of Savings Available Under
Medicare Prescription Drug Plans, March 1, 2006.
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Even larger savings are possible--as much as 83 percent--by
switching to drugs in the same class that treat the same condition as a
beneficiary's current brand-name drug, for example drugs that treat
common conditions like stomach acid problems, allergic rhinitis, high
blood pressure, and high cholesterol levels. According to Consumers
Union, considering these alternative drugs could save beneficiaries
billions more in drug costs each year.\8\ Beneficiaries can get
personalized information on these additional savings from
www.medicare.gov, 1-800-MEDICARE, and many of Medicare's partners.
---------------------------------------------------------------------------
\8\ ``Helping Medicare Beneficiaries Lower Their Out-of-Pocket
Costs Under the New Prescription Drug Benefit,'' Consumer's Union,
December 14, 2005.
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A number of external reports strongly support these findings. For
example, the Pharmaceutical Care Management Association (PCMA) released
a study in February 2006 indicating that Medicare drug plans offer
significant price discounts compared to what beneficiaries would pay
without coverage.\9\ The study found that prices under the Medicare
prescription drug program were on average 35 percent less at
participating retail pharmacies and 46 percent less through mail order
pharmacies. Further, for 25 commonly used medications, the PCMA study
found savings from 18 percent on brand name drugs at retail pharmacies
to 26 percent at mail order pharmacies. In addition, a January 2006
report prepared by the Lewin Group demonstrates that beneficiaries with
chronic conditions, particularly those with multiple conditions, will
see significant savings on their prescription drug bills by enrolling
in a Medicare prescription drug plan.\10\ For example, while
beneficiaries with one chronic condition will save on average $396 on
their medications with Medicare drug coverage, accounting for 26
percent of their current drug spending, those with four or more
conditions will save an average of $1,774, or 41 percent, on their
medications. These studies have made ``apples to apples'' comparisons
of drug prices available at retail pharmacies instead of, for example,
common, but misleading, comparisons between retail pharmacy and mail-
order prices. In addition, in their recent forecast of prescription
drug spending trends, the independent Medicare actuaries have concluded
that overall drug spending in the presence of the Medicare drug benefit
will be slightly lower when compared to spending in the absence of a
Medicare drug benefit, even though Medicare beneficiaries will be able
to fill millions more prescriptions than would have been possible
without the drug coverage.
---------------------------------------------------------------------------
\9\ ``Medicare Drug Discounts Real & Holding Steady,''
Pharmaceutical Care Management Association, February 7, 2006.
\10\ The Lewin Group, ``Savings From the Medicare Drug Benefit for
Beneficiaries with Chronic Conditions,'' Prepared for National Health
Council, January, 2006.
---------------------------------------------------------------------------
Beneficiary premiums are expected to average $25 a month--down from
the $37 projected in last July's budget estimates--and the overall cost
to taxpayers for 2006 has dropped about 20 percent since the July 2005
estimate, according to the CMS Office of the Actuary. The savings
result from lower than expected costs per beneficiary; projected
enrollment in the drug benefit has not changed significantly. For the
10-year period from 2006-2015, the net total cost of the drug benefit
to Medicare is now estimated to be about $130 billion less--$797
billion compared to an estimated $926 billion last year.\11\ In
addition, the state phase-down contributions are now projected to be
$37 billion (about 27 percent) less over the 10-year period.
---------------------------------------------------------------------------
\11\ CMS Office of the Actuary, February 9, 2006. Actual future
costs of the benefit could be higher or lower than these updated
estimates.
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Market Forces Drive Plan Simplification
In addition to reducing the cost of prescription drugs, market
forces are working to simplify the plan offerings, resulting in more
attractive alternatives for beneficiaries. For instance, the standard
plan design calls for a $250 annual deductible. However, to increase
their number of enrollees, 85 percent of sponsors chose to not include
a deductible in their plan design and, in fact, most beneficiaries are
selecting plans without a deductible. CMS is continuing to work on ways
to display comparable plan information to make it as easy as possible
for beneficiaries to review different plan options and make apples-to-
apples comparisons between them. We are encouraged by a recent
Washington-Post-ABC News poll, indicating that three-quarters of
enrollees said the paperwork to sign up for the benefit was easy to
complete, and that nearly two-thirds are saving money under the new
program.\12\
---------------------------------------------------------------------------
\12\ Washington Post, April 12, 2006.
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Medicare and its partners are already making available personalized
information on important plan features, and we are working with many
outside organizations to enhance the resources available to
beneficiaries to help them identify the specific plan or plans that are
a good fit based on their own preferences. As individuals have
different needs and preferences when it comes to their health-care
coverage, presenting plan features in a way that facilitates comparison
on the basis of plan attributes and performance indicators will make it
easier for beneficiaries to choose the plan with the features that are
most important to them.
In our research, we found that the vast majority of the new
enrollees in stand-alone drug plans have chosen plans offering a plan
design other than the ``standard'' drug benefit. Many beneficiaries
chose coverage with a low or no deductible, fixed copayments for most
prescriptions instead of coinsurance, and/or coverage in the coverage
gap--coverage options made possible by the strong competition in the
Medicare drug benefit. In fact, as Figure 3 shows, CMS found that
nearly 69 percent of PDP and almost 90 percent of MA-PD enrollees chose
a plan with no Part D deductible. A very small percentage (2 percent)
of PDP enrollees selected plans with a deductible between $1 and $249,
and 29 percent of the enrollment was in plans with a $250 deductible.
[GRAPHIC] [TIFF OMITTED] T3132A.003
Figure 3: Percent of Enrollment by Deductible Amount
The range of premiums offered by PDPs varies between $1.87 and
$104.89, and the Part D portion of the MA-PD total premium ranged from
$0 to $147.12. The majority of PDP enrollees are in plans with drug
premiums below the national average. In fact, as shown in Figure 4,
while 38 percent of PDP plans offered premiums below $32.20, 73 percent
of the beneficiaries enrolled in one of these plans. It appears that
beneficiaries place a high priority on premium when selecting a plan.
[GRAPHIC] [TIFF OMITTED] T3132A.004
Note 1: $32.20 is the 2006 National Average Premium.
Note 2: This is after excluding the full-benefit dual eligible
beneficiaries.
Figure 4: Percent of Plans and Enrollees by Premium
CMS Automatically Enrolled Full Benefit Dual Eligible Individuals into
Plans
To prevent a lapse in prescription drug coverage for full benefit
dual eligible individuals, CMS worked diligently to make sure they were
enrolled in a Medicare prescription drug plan before January 1, 2006.
In November 2005, any individual who was a full benefit dual eligible
for even one month, beginning in March 2005, was automatically enrolled
in a prescription drug plan. While other individuals generally have the
opportunity to change plans only at the end of the calendar year, dual
eligible individuals have the opportunity to change plans once a month.
This flexibility allows them further opportunities to select a plan
that best meets their needs.
CMS has also worked with the States to identify and auto-enroll
individuals who are about to become full-benefit dual eligible prior to
the end of their Medicaid drug coverage to work toward a seamless
transition. This includes those Medicaid individuals who will age into
Medicare or who will reach the end of the 24-month Medicare disability
waiting period. In anticipation of the shift of drug coverage from
Medicaid to Medicare for full benefit dual eligible individuals, CMS
developed a process for a back-up plan at the pharmacy point-of-sale to
ensure that these individuals experience no gap in coverage.
CMS Facilitates Enrollment for Individuals who Qualify for the LIS
To make sure beneficiaries who qualify for the low-income subsidy
do not miss out on the coverage, we also facilitated enrollment in a
drug plan for beneficiaries who are LIS-enrolled but did not choose a
plan on their own. The group includes not only people who have applied
for and been approved for extra help but also people who are enrolled
in other federal assistance programs such as Supplemental Security
Income and Medicare Savings Programs. This way, we ensured that they do
not miss out on comprehensive, low-cost drug coverage.
In the first phase of this effort, CMS began mailing letters to
approximately 1 million people who are LIS-enrolled but have not chosen
a plan. The letters let them know which Medicare prescription drug plan
they would be enrolled in if they took no action before April 30th and
that their prescription drug coverage would begin on May 1st.
The letter explains that beneficiaries can choose a different
approved plan in their area. It listed all the prescription drug plans
available in their region with premiums at or below the low-income
premium subsidy amount. It also makes clear that they can decline
enrollment if they choose and recommends calling 1-800-MEDICARE to find
out more about these plans.
Medicare beneficiaries who qualify after May 15th for the LIS will
have a one-time opportunity, using a special enrollment period, to
enroll in the drug benefit if they have not already done so. The extra
help allows for comprehensive and valuable drug coverage--in most cases
it means beneficiaries must pay just a few dollars for every
prescription--and we want to make sure that people who need help the
most can use this coverage as soon as they become eligible. The change
in status resulting from an LIS determination after May 15th is an
``exceptional circumstance'' that warrants a special enrollment period.
This special enrollment period enables these beneficiaries to enroll in
a Medicare prescription drug plan right after they become eligible for
the LIS. Medicare will also continue to facilitate enrollment into a
drug plan for people who qualify for the LIS if they do not choose a
plan on their own. Medicare similarly offers one-time special
enrollment periods for other important changes in status.
CMS Worked to Achieve a Smooth Transition in Long Term Care Facilities
CMS is committed to ensuring that the estimated 1.6 million people
with Medicare in the 15,800 long term care (LTC) facilities nation-wide
continue to receive the medications and pharmacy services they need
under the new Medicare prescription drug coverage without interruption.
Many ``private pay'' patients in LTC facilities are getting many
thousands of dollars worth of help with their drug costs for the first
time ever. A majority of individuals in LTC facilities are Medicare
beneficiaries, and many of them also are eligible for Medicaid.
Individuals in LTC facilities represent a unique and vulnerable
population because many have cognitive and/or functional impairments.
This population typically has multiple co-morbidities, the highest
utilization of drugs, with an average of nine medications per day, and
the highest spending for prescription drugs compared to other people
with Medicare.
CMS established dedicated fax lines and mail-in services to allow
nursing homes to obtain beneficiary enrollment information from CMS.
This strategy enabled CMS to help nursing homes identify the plans into
which CMS auto-enrolled more than 500,000 residents. Pharmacists used
the electronic eligibility and enrollment verification (E1) system to
identify the remainder of beneficiaries. By notifying plans that their
dual eligible enrollees reside in nursing homes, and by assisting LTC
facilities in working to correct cases where copay information is not
up to date, CMS is ensuring nursing home residents who are full-benefit
dual eligible beneficiaries have access to Medicare drug coverage
without premiums and copays.
CMS Has Taken Specific Steps to Address Areas Where State Changes are
Needed
Under the MMA, coverage for outpatient drugs for full benefit dual
eligible beneficiaries shifted from the Medicaid program to Medicare
Part D. As a result, state Medicaid programs no longer must pay for
high-cost home infusion drugs. Medicare Part D requires coverage of
home infusion drugs that are not currently covered under Parts A or B
of Medicare. While the Part D benefit does not cover equipment,
supplies, and professional services associated with home infusion
therapy, it does cover the ingredient costs and dispensing fees
associated with infused covered Part D drugs. Medicaid federal
financial participation (FFP) is available for medical supplies and
services associated with administering the infused drugs. To the extent
that Medicaid covers these supplies and services for its non-dual
eligible Medicaid population, the State must also cover these for full
benefit dual eligibles.
We are committed to making the distinctions between Part D versus
Part B coverage as clear as possible. CMS is currently working with
providers, states, and the home infusion industry to clarify payment
obligations under Medicare for home infusion therapy. In addition to
comprehensive guidance issued in 2005, we recently distributed a quick
reference chart to plans and pharmacists and posted a MedLearn article
on the subject. In March, CMS sent to plans and the State Medicaid
Directors letters clarifying the roles of the Medicare Part D drug
program and State Medicaid programs in providing home infusion drugs
and services. The letter clarified CMS access requirements for home
infusion drugs, provided information about how home infusion drugs must
be provided in usable forms, addressed the need for plans to receive
assurances that ancillary services will be provided, and provided a
reminder of the time sensitive nature of home infusion therapy.
Further, we recently sent information to the plans which will
expedite their processes for making sure they are not inappropriately
paying for drugs that should be covered under Part B, and we have
worked with Epocrates, an electronic prescribing software company, to
ensure that their product provides accurate and easy access to plan
formularies. We've also held weekly prescribers' conference calls and
bi-weekly meetings with the AMA and numerous specialty societies to
find out what prescribers are experiencing, to supply them with
information on our activities and answer their specific questions.
Finally, on February 13, 2006, we sent letters to medical specialty
groups recommending that providers include certain additional
information on prescriptions that may help plans and pharmacists
differentiate between Part B and D drugs.
CMS Works With States
Since both CMS and the States are responsible for administering
benefits for dual eligible individuals, CMS is committed to working
with States on an ongoing and collaborative basis. CMS and the States
commenced work in August 2004 through a State Issues Workgroup, which
included representatives from State Medicaid Agencies, the Social
Security Administration, and CMS to assure that States report and CMS
knows of every dual eligible beneficiary in the country undergoing the
transition from Medicaid to Medicare drug coverage.
CMS also engaged the States in a series of summits, conference
calls, and workshops to discuss and address implementation issues
associated with the MMA. These gatherings include monthly all-State
conference calls; State Pharmacy Assistance Program Workgroup
conference calls; and conferences hosted by organizations representing
the States. In addition, CMS provided States with beneficiary
enrollment information, comparative information about the plans, and
targeted educational and outreach materials. Finally, CMS has worked
diligently with States to appropriately identify their full benefit
dual eligible individuals.
Reimbursing States for Assisting in the Transition Process
Despite extensive planning and preparation, some dual eligible
beneficiaries, particularly those who changed plans late in a month,
have had difficulty obtaining their prescriptions at the pharmacy. Due
to these difficulties, 32 States took action to ensure people received
the medicines they needed by activating their state payment systems. We
appreciate the States that supported pharmacists who have faced
difficulties in serving certain dual eligible beneficiaries. States
paid for prescriptions that should have been paid by the new Medicare
prescription drug plans, and CMS believes they should be reimbursed for
these expenses.
To that end, we have established a demonstration project to
reimburse the 50 States and the District of Columbia for costs they
incurred by covering drugs that should be covered by the appropriate
plan. Under the demonstration, Medicare will reimburse States by
reconciling drug payments with prescription drug plans, and by paying
any differential between the drug plan reimbursement and Medicaid
costs, as well as certain state administrative costs. Forty-five States
and the District of Columbia have been accepted into the demonstration
program. Of the States accepted into the demonstration program, 12 did
not activate their state payment systems and are seeking reimbursement
only for administrative costs. In February we notified states that they
could apply for reimbursement for the help they provided to
beneficiaries during the transition until March 8, with some states
receiving extensions until March 31 for costs associated with Part D
claims. By the time that deadline occurred, the vast majority of early
difficulties had been resolved and states no longer needed to provide
emergency back-up.
We are ready to honor our commitment to states. CMS has extended
the deadline for states to incur administrative costs related to
transition full benefit dual eligible individuals to May 5, 2006. We
are currently working through a contractor to process claims, reconcile
with plan sponsors, and begin reimbursing states.
CMS is Correcting Data Transmission Issues
Transmitting accurate and timely beneficiary and plan data was
paramount in ensuring the prescription drug benefit could be
implemented on January 1, 2006. However, despite everyone's best
efforts, information sharing between CMS, the States, and the Medicare
prescription drug plans has not always been perfect. Although smooth
and timely data transfers among Medicare; our drug plans, Medicare
Advantage plans, and retiree plans; and 56 States and territories have
occurred for most beneficiaries, we have been working intensively to
improve these data handoffs.
As an additional safeguard in mid-January, CMS contracted with
Electronic Data Systems (EDS) to help CMS work together with the plans,
States, and pharmacies to resolve challenging data translation issues.
CMS has worked diligently to ensure our data systems interact properly
with other systems so that data information exchanges are accomplished
smoothly and completely to correct problems.
Many plans are sending CMS daily files reflecting their enrollment
transactions, and reliably use our responses to these daily files as
well as our weekly summaries of the results for timely and accurate
updates of their systems. Our goal is that plans covering 90 percent of
the enrollee population will use these daily and weekly data transfer
processes successfully to reduce lags in obtaining updated beneficiary
information.
To check and further assure the accuracy of the information
exchange between plans and CMS, we have sent special updated data files
to plans, including full copayment information, on the full dual and
low-income subsidy enrollment in plans. Our goal is to achieve, by ten
days before a new coverage month begins, at least a 95 percent match
for enrollment and LIS copayment information on applicable
beneficiaries between Medicare and the plans. We obtained a match rate
of greater than 99 percent for duals submitted by the States in the
fall of 2005, and we expect to maintain a high match rate.
CMS is Monitoring Plan Compliance
It is important to note that the plans providing drug coverage to
people with Medicare are under contract with CMS. We have the
operational responsibility to ensure that the plans are providing the
best services available to our beneficiaries. Toward that end, we are
enforcing compliance with plan contracts, including call center
responsiveness, formulary requirements, appeals processes, and pharmacy
contracting.
Key dimensions of customer service include timely access for
beneficiaries and their representatives, pharmacists, and other health
professionals. HHS is conducting routine surveys to determine plan
compliance with Part D standards concerning call abandonment rates and
percentage of calls answered within 30 seconds. Plans will receive this
analysis to inform their performance and compliance analysis, and
information on the performance of plan service lines will be publicly
available in the weeks ahead. Complaint rates related to customer
service are also an important consideration for future participation by
a plan.
We are addressing issues on a case-by-case basis. While we are
responding to complaints, we are also monitoring trends. This tracking
information can lead to corrective action or sanctions if needed, and
will be considered in our contracting decisions for future years. While
most plans are complying with the requirements set forth in their
contracts, we will use the full array of administrative tools and other
enforcement remedies to ensure plans adhere to the terms of their
contracts. When we hear of specific complaints we work with plans to
ensure timely resolution.
Extensive Plan Formulary Requirements Provide Access to Needed
Prescription Drugs
CMS developed a set of checks and oversight activities to ensure
that prescription drug plans offer a comprehensive benefit that
reflects best practices in the pharmacy industry, as well as current
treatment standards. Plan formularies must recognize the special needs
of particular types of people with Medicare, such as individuals with
mental health issues, individuals with HIV/AIDS, individuals living in
nursing homes, people with disabilities, and others who are stabilized
on certain drug regimens. CMS reviewed plan formularies and benefit
structures to verify that they are in compliance with the following
critical requirements: a plan's formulary must cover multiple drugs in
each class with a minimum statutory requirement of at least two drugs
in each approved category and class (unless only one drug is available
for a particular category or class); and CMS requires that each plan's
formulary include all or substantially all drugs in each of the
following key categories: antidepressants, antipsychotics,
anticonvulsants, anticancer drugs, immunosuppressants, and
antiretrovirals for treating HIV/AIDS.
In addition, each Medicare prescription drug plan's formulary was
developed and reviewed by the plan's pharmacy and therapeutics
committee. Each formulary must be consistent with widely used industry
best practices. Furthermore, CMS compared the prescription drug plans'
use of benefit management tools to the way these tools are used in
existing drug plans to ensure they are being applied in a clinically
appropriate fashion.
Plans must accommodate the needs of long-term care residents within
their formulary structure by providing coverage for all medically
necessary Part D medications at all levels of care. Coverage of all
medically necessary medications may include, but is not limited to,
alternative dosage forms such as liquids that can be administered
through feeding tubes, intravenous medications, or intramuscular
injections.
CMS will review any request for deletion of a drug from a plan's
formulary to ensure continued access to a broad range of drugs. Plans
cannot remove a drug from their formulary without, among a number of
other steps, first obtaining CMS approval and providing a 60-day
advance notice to their affected enrollees. As we deem it appropriate,
we are working to strengthen formulary protections. On April 26, we
changed our policy to better protect Medicare beneficiaries from the
sudden loss of coverage for drugs they currently take. Now, plans that
change their formularies during the year will exempt beneficiaries who
are already receiving the drugs when the change is made. This should
provide many beneficiaries with greater peace of mind that their
prescription drugs will remain covered throughout the plan year. The
enrollment period continues for almost two more weeks and we are
encouraging and helping people with Medicare to review their options
and select a plan that works best for them.
In addition, CMS developed specific procedures for timely
exceptions and appeals to ensure that enrollees receive prompt
decisions regarding whether medications are medically necessary and
therefore covered by their prescription drug plan. For example, if the
enrollee is requesting coverage of a non-formulary drug, the drug may
be covered if the prescribing physician determines that all of the
drugs on the formulary would not be as effective as the non-formulary
drug or would have adverse effects for the enrollee, or both. The plan
would review the physician's determination and must make its decision
as expeditiously as the enrollee's health condition requires after it
receives the request, but no later than 24 hours for an expedited
coverage determination or 72 hours for a standard coverage
determination. We are collecting information on the use of a plan's
appeals and grievance processes to ensure that each plan is complying
with the requirements.
CMS is Ensuring Pharmacists Receive Prompt and Accurate Payments from
Plans
We have heard from pharmacies about the early problems they faced
in receiving payments from the prescription drug plans for the services
they provided. While new billing and payment cycles caused cash flow
issues at some pharmacies in January, pharmacies now are receiving
payments in regular cycles in accordance with their plan contracts. CMS
is taking compliance with required contractual payments very seriously.
When we hear specific complaints about a plan failing to abide by its
contract with a pharmacy, we investigate and hold the plan responsible
for complying with its contract. Our investigations to date have found
that pharmacists are generally being paid according to their contracts,
though some are having other difficulties, such as not connecting the
name of the payer with the prescription drug plan or facing challenges
in matching claim dates with payment dates, making it difficult to
reconcile their financial books. CMS will continue to investigate and
track any complaints from pharmacists regarding payments, and will take
action if we determine that plans are not following their contractual
agreements.
CMS Commitment to Continuous Quality Improvement demonstrated in Annual
Adjustments for 2007
On April 3, 2006 CMS issued the 2007 Call Letter, which provides
guidance to existing PDP sponsors as well as those that are newly
applying to enter the program. I would like to take this opportunity to
highlight some of the more significant policies for bidders in 2007.
CMS Anticipates Bids Will More Clearly Reflect Variations that
Beneficiaries Prefer
In order to ensure that plan choices offered in 2007 clearly meet
beneficiary needs and enable beneficiaries to compare different kinds
of plans and confidently choose the coverage that is best for them, CMS
intends to negotiate with PDP Sponsors to ensure that each benefit
package they submit will provide beneficiaries with a substantially
different option. In 2006, we allowed sponsors to offer a wide array of
plan designs in addition to the standard benefit designed by the
Congress. However, as discussed earlier, an overwhelming majority of
beneficiaries are choosing plans that offer benefits other than the
standard option as defined in the law. In 2006, almost 90 percent of
beneficiaries were not enrolled in the standard benefit design, but
rather have enrolled in plans with low or no deductibles, flat payments
for covered drugs, and in some cases, coverage in the coverage gap.
Plans will continue to have flexibility to offer people with
Medicare benefit designs with these popular features in 2007. However,
in general we expect that more than two bids from a sponsoring
organization would not provide meaningful variation, unless one of the
bids is an enhanced alternative plan. Further, CMS anticipates that
plan sponsors will design new plan options for 2007 in accordance with
the enrollment trends in 2006.
CMS Evaluation Criteria
CMS will issue PDP Sponsor contractor renewal notices to those
Sponsors we have determined, based on information available to us,
continue to be qualified to hold a contract during 2007. CMS reviews
each PDP sponsor's compliance with all requirements of the program to
determine whether contract renewal is warranted. While many plans are
performing well or achieving significant improvements in key areas of
beneficiary service and support, CMS considers non-renewal if there has
been a substantial failure to comply with program requirements. We pay
special attention to key operational areas which impact customer
satisfaction and successful delivery of the benefit, including
effective data systems, customer and provider service, exceptions and
appeals processes and pharmacy support, which are outlined in more
detail below.
Effective Data Systems
Determining a beneficiary's correct enrollment status, including
copayment status, lies at the heart of ensuring his or her access to
the Part D benefit. Because enrollment data are updated much more
frequently than previously done in the Medicare+Choice program, and
timely and accurate data processing by plans is essential, CMS expects
sponsors to develop and maintain information systems that accurately
process updated enrollment information at least weekly, following
recommended processing procedures to avoid significant delays or
inaccuracies in processing enrollments.
Effective Customer Service
CMS expects PDP Sponsors to provide a high and consistent level of
access and service for beneficiaries and their representatives,
pharmacists, and other health care providers. CMS has updated for 2007
performance standards for certain customer service and provider contact
telephone line operations. CMS is conducting routine surveys to
determine Sponsor compliance with Part D standards. For the Current and
Prospective Enrollee Call Center, CMS provided specific minimum
requirements for hours of operation and the content of information
available from the call centers to address beneficiary inquires. As an
example, the call center must answer 80 percent of incoming calls
within 30 seconds, and the abandonment rate of all incoming calls is
not to exceed 5 percent.
For the Pharmacy Technical Help Call Center, Sponsors must operate
a toll-free pharmacy technical help call center to respond to inquiries
from pharmacies and providers regarding the applicant's Medicare
prescription drug benefit. The call center must operate during the
entire period during which the sponsor's network pharmacies in their
plans' service areas are open, and must meet the same answering and
abandonment rates as the beneficiary call centers.
For the Exceptions and Appeals Call Center, Sponsors must operate a
toll-free call center to respond to physicians and other providers for
information related to exceptions and prior authorizations, as well as
beneficiary appeals. The call center must operate during normal
business hours and provide a secure voicemail.
Following Transition Guidance
While the new prescription drug plans are required to cover
medically necessary prescriptions, CMS required plans to establish an
appropriate transition plan for all new enrollees to address situations
where a new enrollee's prescribed medications are not on the plan's
formulary. The transition policy allows beneficiaries to get a
temporary supply of their current drugs while they determine whether a
similar on-formulary medicine will work for them. Additionally, CMS
recommends that transition plans address unanticipated enrollee
transitions when individuals need to change treatment settings due to a
change in their level of care. In addition to reviewing Sponsor reports
on its transition compliance, CMS is monitoring complaint rates related
to transition coverage of drugs.
Avoiding Excessive Burdens in the Exceptions and Appeals Process
CMS expects PDP Sponsors to provide prior authorization and
exceptions forms and access to information to make transition
procedures straightforward for providers and patients. PDP Sponsors are
expected to limit administrative burdens for physicians and other
providers by implementing recommended best practices for consistent
forms, including steps to obtain formulary exceptions and processes for
providing needed clinical information for processing prior
authorization requests for specialized drugs.
Sponsors must also have a ``one stop'' area on their web site that
provides needed information on the procedures, the forms, and the
contact information for their prior authorization and exceptions
processes.
Maintain and Strengthen Relationships with Pharmacists through
Contractual Support and Avoiding Administrative Burdens
PDP Sponsors must comply with the contractual agreements they have
made with their participating pharmacies, and CMS is monitoring
pharmacists' complaints about plan compliance with these agreements and
other pharmacy requirements of the Medicare program. Sponsors are also
expected to follow recommended best practices for consistent coding and
secondary message responses when formulary, prior authorization, Part B
coverage, or other rejection edits are activated.
CMS Changes Co-Branding Policy in 2007
In addition to the abovementioned policy for 2007, based on
feedback from beneficiaries and the health care industry, co-branding
names and/or logos of contracted providers may be confusing to
enrollees and unintentionally convey a message that they can only use
the co-branded provider, rather than all participating providers listed
in the plan's provider or pharmacy directory. Thus, effective with the
beginning of CY 2007 marketing (October 1, 2006), PDP sponsors will not
be permitted to place co-branding names and/or logos on their member
identifications cards.
Anticipating Next Steps
In addition to the actions CMS took to address issues that arose at
the start of the new Medicare prescription drug benefit, we are looking
ahead to ensure we address any issues facing people with Medicare,
caregivers, providers, the plans, and pharmacists in the future. We are
anticipating increased enrollment ahead of the end of the open
enrollment period in May, and we are continuing to optimize systems to
limit problems with coverage at the pharmacy counter on June 1st. In
recent weeks, we have been doing all we can with the support of our
partners to help people find out about and take advantage of the new
coverage if they haven't made a choice yet. We are drilling down to the
census block and neighborhood levels with our partners--including many
of you--where we will be continuing our full scale effort on education
and enrollment events.
In addition, we will continue to improve data translation among
Medicare, the health plans, and States to continue reductions in the
number of rejected or delayed transactions. CMS also is monitoring
plans' customer service and hotline wait times, while also providing
responsive service through 1-800-MEDICARE. CMS continues to work with
the States participating in the reimbursement program to ensure
effective use of Medicare coverage by connecting beneficiaries to their
new Medicare prescription drug plans and helping pharmacists use
Medicare backup systems if necessary. As implementation continues, and
more and more beneficiaries select and enroll in a new prescription
drug plan, CMS will continue to improve the program and solve problems,
guided by the lessons we have learned to date.
Conclusion
Thank you for the opportunity to discuss our progress during the
first four months of the Medicare prescription drug benefit. While we
are pleased that millions of Medicare prescriptions are being filled
every day, we are going to continue working to ensure every person with
Medicare can use their coverage smoothly. I am happy to answer any
questions you may have.
Chairman JOHNSON OF CONNECTICUT. Ms. Disman, before we
proceed we must recess for three votes. So, it will take about
20 minutes. Then we will pick up with your testimony and then
questioning to this first panel.
Thank you very much.
[Recess.]
Chairman JOHNSON of CONNECTICUT The hearing will resume.
Ms. Disman, if you will proceed.
STATEMENT OF BEATRICE DISMAN, CHAIRMAN, MEDICARE PLANNING AND
IMPLEMENTATION TASK FORCE, SOCIAL SECURITY ADMINISTRATION
Ms. DISMAN. Thank you, Madam Chairman and Members of the
Subcommittee. On behalf of Commissioner Barnhart, I want to
thank you for inviting me to discuss Social Security's efforts
to implement the new Medicare Part D low-income subsidy of the
Medicare Modernization Act, or MMA.
I am Beatrice Disman, Regional Commissioner of the New York
Region of the SSA. I have been in my current position since
1995, and I have actually been with Social Security since 1965,
and I was there for the implementation of the Medicare program
in our midtown Social Security office.
In December 2003 Commissioner Barnhart asked me to chair
Social Security's Medicare Planning and Implementation Task
Force, making me responsible for Social Security's role in
implementing MMA.
As you know, Madam Chairman, Social Security was given the
responsibility from Congress to take ``extra help''
applications and to make eligibility determinations for
individuals who were not automatically eligible. I have
explained the eligibility requirements in detail in my written
statement.
Social Security was given its MMA responsibilities because
of its network of nearly 1,300 offices and 40,000 employees
across the country. We are in every community, and that was a
real benefit for the program as well as for our role in
administering some parts of the Medicare program already.
Upon passage of MMA, we immediately recognized the
development of the simplified application for extra help was
essential for successful implementation of the program. As I
have described in my written statement, we, in partnership with
the Centers for Medicare and Medicaid Services, conducted
substantial testing of the extra-help application. The paper
application changed significantly over time, going through many
drafts before being finalized.
Our system staff contributed to the design of the
application, to make sure the information on the form could be
electronically scanned into our computers, thereby minimizing
the number of employees needed to process incoming forms.
We worked to develop alternatives to the traditional paper-
based application. In July of last year we unveiled the
Internet version of the application, allowing people to file
online for help with costs associated with the Medicare drug
plan. The online application has been a tremendous success with
more than 1,300 individuals daily filing for the extra help.
Telephone inquiries were also part of our efforts to make
the extra-help application process as simple as possible. We
provided extensive training to our teleservice representatives
so that they could answer subsidy-related questions. We
developed an automated application-taking system, allowing our
teleservice representatives to refer callers directly to
specialized claims-taking employees who could take the
application by phone.
We developed a computer matching process with the Internal
Revenue Service to validate resource and income-related
information provided by applicants. Using this computer match
allowed Social Security to build an application process that
would not require applicants to submit proof of resources and
income as long as the applicant's statement was in substantial
agreement with the computer records.
This permitted greater use of the scannable and the
Internet application, and actually reduced the need of Medicare
beneficiaries to travel long distances to visit our Social
Security offices.
I would now like to turn to the efforts Social Security has
undertaken to inform beneficiaries about the extra help
available for prescription drugs. For example, more than 72,000
Medicare outreach events have been held and in many of these,
we were certainly there with CMS and CMS was certainly at these
events with us.
As we also had targeted application-taking events held in
our Social Security field offices, I can tell you from my New
York experience that we opened our offices on Saturday and
stayed late in the evening to assist people to file for the
extra help. We continued to work with all the States and other
organizations to identify people with limited income and
resources, who may be eligible for the extra help, and to take
applications from them. We are on site in senior citizen
centers, hospitals, community centers, housing authorities,
adults' homes, churches, just to mention a few locations.
Our outreach efforts are continuing because there is no
deadline for individuals to file for the extra help for lower-
income beneficiaries. Although the new prescription drug plan
did not begin until January of 2006, Social Security began
mailing applications to individuals who might be potentially
eligible in May 2005. The initial effort also allowed us to
begin making eligibility determinations for the extra help as
early as July 2005.
As much as the initial mailing of applications was
important, follow-up telephone calls or letters to individuals
who didn't return the application was just as important.
Again, there is more detailed information in my statement.
The results of these many months of efforts speak for
themselves. At the end of April, Social Security has received
applications from more than 4.9 million beneficiaries,
including almost 850,000 applications that were duplicate
applications.
Of the remaining approximately 4 million, we have made
determinations on 3.9 million individuals. We have now found
that 1.7 million individuals are eligible for the extra help.
In conclusion, I want to express Commissioner Barnhart's
thanks and my personal thanks to the Committee for your
continuing support for the agency. Your support for the
President's 2007 budget will allow Social Security to continue
to provide the kind of service your constituents have come to
expect from us, not only in administering the low-income
subsidy and premium withholding for the Medicare prescription
drug program, but also for our traditional services. We look
forward to working with you as we continue our efforts to reach
the low-income population.
Thank you. I will be glad to answer any questions you may
have.
Chairman JOHNSON of CONNECTICUT. Thank you very much.
[The prepared statement of Ms. Disman follows:]
Prepared Statement of Beatrice Disman, Chairman, Medicare Planning and
Implementation Task Force, Social Security Administration
Madam Chairman and Members of the Subcommittee:
On behalf of Commissioner Barnhart I want to thank you for inviting
me to discuss Social Security's efforts to implement the new Medicare
prescription drug coverage low-income subsidy program.
SSA has already done a great deal to assist low-income Medicare
beneficiaries in receiving extra help with their prescription drugs
through the new Medicare prescription drug coverage, and we will
continue this mission with a firm commitment to the public we serve. As
Commissioner Barnhart has said, ``Together, we can make sure no one has
to make the difficult choice of spending their limited income on
prescription drugs or other basic needs.''
Background
To begin, it may be helpful to describe Social Security's role and
responsibilities regarding the new Medicare prescription drug coverage.
This will provide the context to further describe SSA's activities in
getting low-income people the extra help intended by Congress.
As you know, the Medicare Modernization Act, or MMA, enacted in
December 2003, established the new Medicare prescription drug benefit.
The new Medicare prescription drug coverage was designed to allow all
people with Medicare an opportunity to voluntarily enroll in
prescription drug coverage. MMA also provided an extra level of
assistance for people with Medicare who have limited incomes and
resources in helping to pay for the monthly premiums and cost-sharing
that is required by the new Medicare prescription drug coverage. This
assistance is the low-income subsidy, or ``extra help,'' as it is
frequently called.
The responsibility for enrolling individuals for the prescription
drug coverage is a joint effort between the Department of Health and
Human Services (HHS) and private insurance companies, which establish
Prescription Drug Plans (PDPs) for that purpose. Individuals who were
already eligible for Medicare and full Medicaid benefits were
automatically enrolled by the Department of Health and Human Services
in the subsidy, and did not need to apply. They were also auto-enrolled
in a plan in November 2005.
SSA was given the responsibility by Congress to take extra help
applications and to make eligibility determinations for individuals who
were not automatically eligible. In order to be eligible for the
subsidy, individuals must have incomes below 150 percent of the poverty
level applicable to their corresponding household size, and resources
of less than $11,500 for single individuals or $23,000 for married
couples.
Individuals with incomes between 135 percent and 150 percent of
poverty are eligible for a subsidy amount based on a sliding scale.
Individuals with incomes below 135 percent would be eligible to receive
the most subsidies.
Additionally, SSA was charged by Congress with the collection of
premiums for the prescription drug program itself, in cases where
beneficiaries tell the Prescription Drug Plans when they enroll that
they want their premiums withheld from monthly Social Security
benefits. This withholding of premiums is similar to the function SSA
already performs for beneficiaries in the withholding of other Medicare
premiums. SSA was given these responsibilities because of its network
of nearly 1,300 offices with 35,000 employees across the country, and
because of its already existing role in administering some parts of the
Medicare program. Over the past 70 years, SSA has gained a reputation
for helping citizens in the communities where they live, and Congress
realized that SSA's presence ``on the ground'' would be vital in the
launch of the Medicare extra help program. Also, the low-income subsidy
was designed with many similarities to the Supplemental Security Income
(SSI) program, a means-tested assistance program for low-income aged,
blind and disabled individuals, which SSA has administered for more
than 30 years.
Obviously, these new responsibilities have impacted SSA's
workloads. We saw significant increases in our office visits and
telephone calls, especially in December and January. Some of this
increase was due to uncertainties by Medicare beneficiaries on whether
to contact CMS, the Prescription Drug Plans, or SSA to enroll in Part
D. However, the increases were also caused by changes that SSA
implemented to its enumeration process in mid-December. The
strengthened evidence requirements for obtaining a Social Security card
have caused a sustained increase in our field office traffic.
Development of Extra Help Application
Upon passage of MMA, Social Security immediately began planning for
the implementation of the limited-income subsidy. We recognized from
the onset that development of a simplified application for the extra
help was essential for successful implementation. Thus, our goals were
to develop an application that elderly and disabled Medicare
beneficiaries, their caregivers, or other third party assistance
providers would be able to understand and easily complete. SSA also
wanted to maximize the use of automation, not only to process these
forms efficiently, but also to process them in a timely manner.
To accomplish these goals, SSA conducted substantial testing of the
extra help application form. The paper application changed
significantly over time, going through many drafts before being
finalized. Social Security, in collaboration with CMS, conducted focus
groups with current Medicare beneficiaries to test potential
applicants' understanding of the application, and conducted special
cognitive testing of the subsidy application and had design engineers
review the layout of the applications. We also discussed various draft
versions of the application with national and local advocacy groups and
with State Medicaid Directors.
Our Office of Systems staff contributed to the design of the
application as well to make sure that the information on the form could
be electronically scanned into our computers, thereby minimizing the
number of employees needed to process incoming forms.
Realizing the need to reach our beneficiaries in new ways, SSA
worked to develop alternatives to the traditional paper-based
application. In July of last year, we unveiled the Internet version of
the application located at www.socialsecurity.gov, allowing people to
apply online for help with Medicare Prescription Drug Plan costs. The
online application has been a tremendous success, receiving one of the
highest scores ever given to a public or private sector organization by
the American Customer Satisfaction Index (ACSI). As of April 2006, we
are still receiving more than 1,300 Internet applications daily.
Telephone inquiries were also part of our efforts to make the extra
help application process as simple as possible. We provided extensive
training to assist our teleservice representatives in answering
subsidy-related questions. We also developed an automated application-
taking system, allowing the teleservice representatives to refer
callers directly to specialized claims-taking employees who could then
take applications by phone. This new system allows individuals calling
our 1-800 number to immediately file for the extra help.
Under authority created by the Medicare Modernization Act, we also
developed a computer matching process with the Internal Revenue Service
(IRS) regarding the validation of certain income information provided
by applicants. Using this computer match allowed SSA to build an
application process that would not require applicants to submit proof
of resources and income, as long as the applicant's statement on the
application was in substantial agreement with the computer records.
In summary, although means-testing is by its very nature complex,
we believe that we have created a simple application process, which
allows individuals to apply for the extra help as quickly and easily as
possible, while also taking advantage of current technology.
Outreach Efforts
I would now like to turn to the efforts SSA has undertaken to
inform beneficiaries about the extra help available for prescription
drugs. Efforts to educate the public about the new, extra help program
began almost immediately after passage of MMA, and this outreach
continues today. SSA has worked with CMS and other Federal agencies,
community based organizations, advocacy groups, and State entities in
order to spread the word about the available extra help.
During the past year, SSA has held more than 72,000 Medicare
outreach events. Targeted application-taking events were held in Social
Security offices throughout the country, and personal invitations to
these events were mailed to beneficiaries who had not yet applied for
the extra help, but had been identified as being potentially eligible
for the program.
We continue to work with States that have their own pharmaceutical
programs, State Health Insurance Programs, Area Agencies on Aging,
local housing authorities, community health clinics, PDPs, and others
to identify people with limited income and resources who may be
eligible for the extra help.
Throughout these efforts, SSA's goal has been to reach every
potentially-eligible Medicare beneficiary multiple times, in a variety
of ways, for example, by targeted mailings, follow-up phone calls, and
targeted events. And while we are confident we have taken appropriate
steps to reach out to those who may be eligible for the extra help, our
outreach efforts will continue throughout 2006. There is no enrollment
period for the extra help--a Medicare beneficiary can apply at any
time.
Additional Outreach & Mailing of Subsidy Applications
Although the new Medicare prescription drug coverage did not begin
until January 2006, SSA began mailing applications to individuals who
were potentially eligible for extra help in May 2005. During the
following three months, we mailed almost 19 million applications. Our
goal was to have as many potentially eligible limited income Medicare
beneficiaries as possible file for the extra help before the Medicare
prescription drug program started in January 2006.
We also intended to cast the widest net possible in our efforts to
reach the public. Thus, we sent the 19 million applications to
potentially eligible individuals, even though we knew that not all of
this group would meet the income and resource requirements. This
initial effort also allowed us to begin making eligibility
determinations for the extra help as early as July 2005.
As much as the initial mailing of applications was important,
follow-up contacts with those individuals who did not return the
application was just as important. We contracted with a vendor to
remind individuals of the availability of the extra help program and to
ask if they needed assistance. Of the 9.1 million people who were
called by the vendor, 800,000 had applications resent to them, and
400,000 requested assistance and were referred to SSA. In addition, 5
million follow-up notices were sent because the vendor could not locate
a phone number for the individual (for example, an individual who was
displaced by Hurricane Katrina).
We continue to use Agency mailings to inform the public. For
example, the cost of living adjustment notice sent in December 2005 to
52 million Social Security beneficiaries contained information about
the new drug program and the availability of extra help. The 4.2
million letters SSA sent to individuals potentially eligible for extra
help, during September and October 2005, also contained information
about the subsidy.
Also, SSA identified approximately 1.5 million disability
beneficiaries who received an extra help application mailer, but did
not file an application. We mailed a follow-up notice to these
beneficiaries between March 16 and April 11 notifying the beneficiaries
that they may be eligible for the subsidy.
In addition, as a pilot, we recontacted approximately 5,000
beneficiaries, who did not respond to an extra help application mailer,
but had previously applied for and received the Medicare $600 drug
discount card credit, to offer help in completing the extra help
application. We are now looking at expanding the effort.
SSA is also examining other ways in which we might reach
individuals who could be assisted by the extra help program. For
example, we established cooperative projects with tax preparers, who
deal with people filing for the Earned Income Tax Credit, to screen for
the extra help.
Success So Far
As of April 30, SSA has received applications from more than 4.9
million beneficiaries, of which almost 850,000 were unnecessary,
because either the applicants were automatically eligible or because
they had filed more than one application. We have made over 3.9 million
determinations on the eligibility for extra help and have now found
more than 1.7 million of these individuals eligible. We have also
notified the individuals who filed unnecessary applications of their
current eligibility.
While we are proud of the initial success that we have had with
helping so many beneficiaries pay for their prescription drugs, there
is much more that we need to do. Commissioner Barnhart has made it
clear that we need to continue to aggressively promote this valuable
benefit, and to this end, we continue to look for ways to reach those
eligible for the extra help program.
While SSA has no direct role in assisting individuals in either
selecting or enrolling in PDPs, we have also provided instructions to
the field offices on how to make sure those with the new Medicare
prescription drug coverage questions are directed to the resources they
need. In some cases this means our employees will simply refer the
questioner to 1-800-MEDICARE, or to the beneficiary's PDP provider, but
in other cases it means making a personal call to state coordinators,
reprinting and faxing award notices, and even making emergency calls to
CMS Regional Offices.
In short, we are committed to doing whatever we can to help make
this new program accessible to our beneficiaries.
Conclusion
In conclusion, I want to express Commissioner Barnhart's thanks,
and my personal thanks, to this Committee for your continuing support
for the Agency. Your support for the President's 2007 budget will allow
Social Security to continue to provide the kind of service your
constituents have come to expect from us, not only in administering the
low-income subsidy and premium withholding for the Medicare
prescription drug program, but also for our traditional services.
We look forward to a continued dialogue with your Committee as we
progress with implementation of the extra help program. We very much
want to hear your ideas. While we have found that there is no single
contact method that guarantees success, we have learned that the more
times we reach these limited-income beneficiaries, the more we are able
to help them.
Thank you and I will be glad to answer any questions you may have.
Chairman JOHNSON OF CONNECTICUT. We have now just passed an
hour since I convened this hearing. In that hour, 1,813 seniors
have joined the Medicare Part D program. In addition, Mr. Stark
has asked me to enter into the record the Congressional Budget
Office's letter that estimates that 1 million beneficiaries
would enroll in Part D in 2006 if the enrollment period were
extended.
[The information follows: PENDING]
Chairman JOHNSON OF CONNECTICUT. Dr. McClellan, I
understand that your actuaries at CMS have done similar
estimates, and I would like you to comment on this estimate and
also to provide for the record the statement from the CMS
actuary on this issue.
Dr. MCCLELLAN. We will be happy to do that. In terms of the
impact on the enrollment deadline, our actuaries have
concluded, like actuaries around the country find with
insurance plans and other benefits, that deadlines are very
important in encouraging people to act.
The CMS actuaries concluded that without the deadline, 1.6
million fewer Medicare beneficiaries would enroll in the drug
coverage and get advantages from the benefits. I have been
going around the country a lot. I see this firsthand. A lot of
the people who are looking in the program now are people who
have been putting off a decision. Signing up for health
insurance may not be the most fun thing you do in a day, but
they know it is very important for their health and very
important for their finances so they are doing it. Also a lot
of people with low drug costs are understandably waiting until
close to the deadline.
I was down in Arlington, Texas and met a nice lady there
who said she takes only one or two drugs now, but she will sign
up for the coverage now so she will have peace of mind as she
gets older. She is 102 years old, but this benefit works for
all beneficiaries no matter how old they are.
We are seeing more people sign up because the deadline is
there. Now is the time when we have lots of assistance
available for them, when all of our partners, all of our
customer service representatives are there, between now and May
15, to help them make that decision.
Chairman JOHNSON OF CONNECTICUT. Thank you very much. We
look forward to having that letter to put in the record,
alongside the other letters. It shows how difficult it is to
estimate.
I was interested that The New York Times had said the
deadline was a useful prod for fence-sitters. Certainly we all
know how much we intend to do something and often don't do it
until we absolutely have to do it.
I also thought it was very interesting that 75 percent of
seniors who have enrolled in Plan D are either satisfied--are
either very satisfied or satisfied with the plans performance.
I was equally interested in, because both of you have
worked very hard at getting tools out there, getting local
voices in the community, enabling seniors to go to people they
trust. Indeed, in one of my senior citizens centers they don't
want the choice because they like the pool of people who are so
well trained, and they would rather wait their turn with their
local advisers. That has worked very, very well.
All of the grassroots training that you have done is very
important. Yet in the Kaiser Foundation poll of April 6th to
11th, they found that 54 percent of those who had chosen a
Medicare drug did so on their own. That is interesting to me,
because in my office we have had people call and say oh, this
is so confusing, and this is so confusing. When we ask them
have you tried, they say, oh, no. When we have them try or when
I see them at sign-up things, they say it isn't so confusing.
So, it is unfortunate that so much print and breadth of
public leaders has been devoted to basically scaring seniors
that was dangerous and difficult; when it is, it certainly is
something you have to put your mind on, but the people you have
gotten out there to help one on one have made all the
difference; and that many seniors, we forget, many seniors are
able to use the computers.
In fact, some of the advisers who signed up, one I met
recently, was a former human resources developer. So, we have
had some very good success not only with getting seniors to
sign up, but with generating support in the community for
helping one another. That has been wonderful to see. Frankly, I
haven't seen that level of just communities coming together to
help each other in a long time. We will come back later on to
some other aspects of the plan that will help it.
Right now, I will recognize Mr. STARK.
Mr. STARK. Thank you, Madam Chair. Could I just borrow
this? Look at those aluminum tubes, just right out of the State
Department testimony.
In your benefit design, as I understand it, about 86
percent of the stand-alone plans have a doughnut hole or some
coverage gap, and about 8 million people and change have
enrolled in stand-alone plans.
Can you give me an idea, or can you get back to me as to
how many of these 8 million in stand-alone plans still have a
doughnut hole or some form of coverage gap, or do you know,
approximately?
Dr. MCCLELLAN. I can get you that number, approximately, in
just a minute. What the beauty of a program with choice is of
the options out there, people don't have to choose any one of
them that they don't like, and people are disproportionately
enrolling in the plans that fill in the doughnut hole, just
like they are disproportionately enrolling in plans that
provide other benefits. That is a big extra help for people who
have high expected drug costs.
Mr. STARK. Okay. Again, my concern is not that we can't
help some people, as I said earlier. You throw $1 trillion at
40 million people, somebody has got to get help besides the
pharmaceutical industry.
I have trouble with--and I hate to tell you this, but you
probably already know it--your boss, Secretary Leavitt, just
some moments ago, in his testimony in the Senate, before the
Health and Human Services Appropriations Subcommittee, said, I
think definitively as Congress Daily put it, said: There ain't
going to be any extension.
I was kind of hoping you guys would have an epiphany, is
that what it is, John, in the last--in the eleventh hour, and
save a lot of those seniors from the penalty.
If I am correct in this assumption, I know you have stated
in a variety of forums and ways that the penalty is necessary,
basically to prevent adverse selection, for me to stay out of
the plan until I know I am going to need diabetic drugs or
chemotherapy and then sign up. That is why I would agree with
you and everybody else, and at some point, a penalty, like we
have in Part D.
I am not so sure, maybe you could convince me otherwise,
that we lose a lot by letting people go to January without a
penalty. If what you are suggesting is out of these 7- or 8
million people, that they have got this all figured out, my
guess is that with their shoes and socks on, they can do the
math; and the penalty would cost them more than what they would
spend in 8 months in premiums.
I am sure that is the case in any of these plans; that if
you look at some life expectancy beyond 5 years, to say, jeez,
I am going to have a penalty of 10, 12 percent, what it could
run, for the remainder of my life, or I have the option of
paying for just an extra couple of months, even these guys are
going to figure out that they are probably on the better side
of the math, if they are that sophisticated, to take the lower
premium and not gamble. You may have figured it out
differently.
If, though, you will agree with me, without a question of
fault, that there is some confusion, there is some waiting
because of lack of resources to take everybody and get them the
information, the costing they need, instantaneously--and I
don't expect we could do that. Quantify for me the dollar harm,
if you can, that you could see in giving these people another,
basically, 7 months, and forgoing that penalty until the first
of the year.
You have done it for some already. My guess is that in the
long run, we would have people who would have done a better job
of selecting the right plan, and the government would lose some
penalty dollars, and as CBO tells us, $2 billion over $5
billion. If you are talking about a $1 trillion program, I
would submit that that is not very urgent to us, and we may be
better off with a better-served population.
Quantify for me, the other side of that, which I know you
are on.
Dr. MCCLELLAN. Let me try to throw out a few numbers. First
of all, I think you are absolutely right; for someone who is
thinking about getting this protection, because the premiums
have turned out to be so low--in your district it is only
around $10 a month and all over the country it is under 20--
this is a very inexpensive way to get peace of mind for the
future.
Now, in terms of the number of people that are affected
here, as you mentioned there are about 5- or 6 million who have
not yet signed up and who don't have coverage from another
source.
Out of that group, more than half are eligible for the low-
income subsidy. As we have already talked about, we will be
continuing and redoubling our efforts to reach that population.
We have new partnerships that are really getting underway right
now. There, we will continue to be getting them enrolled as
quickly as we can, before or after May 15. That takes us down
to 2- or 3 million beneficiaries, which is well under 10
percent of the total Medicare population. We are seeing
hundreds of thousands of people sign up each week. We are
seeing a surge in the number of our phone calls that we are
getting now, a surge in the use of online enrollment. People
clearly are starting to focus in with the deadline. I think we
are going to get--have an opportunity to get most of those
people enrolled now.
The reason that I think--well, let me give you one more
important number to focus on; that is the $1,100 that is the
average savings a beneficiary will get this year from the drug
coverage. If you talk about the penalties, the penalties come
from beneficiaries not getting this assistance as soon as
possible.
If we lose 1.6 million people, which is most of this
population that is left--that is actuaries' estimates--that is
forgoing billions of dollars in drug savings that our
beneficiaries really need. Between now and May 15 is when all
of the assistance is available to help them make a good choice
and start saving money. That help is not going to be available
after May 15.
So, the result is potentially--I think that is the right
number--$1 billion in lost opportunities to save on the drugs.
It is not a large part of our overall population. I am not as
concerned about the penalty amounts as I am about our
beneficiaries getting help with their drug costs, making a
confident decision about their coverage as soon as possible.
Mr. STARK. If the Chair would indulge me for just another
minute.
CBO tells me we get another 1 million people in. It is
dueling statistics, but it is a gamble. My question to you is
twofold: One, let us gamble on the side of getting people in.
They will be better off for it as you and I would agree.
Secondly--and I am sure Ms. Disman could remind you if you
don't know--but there is not a one of us here on this dais who
hasn't had a town meeting where somebody has come in and waved
this direct-mail solicitation to help them solve a notch
problem.
What you may very well be doing for us, and you will earn
the enmity of everybody on this dias, is creating a whole new
batch of notch babies, who, for the next 10 years, will be
coming to our town meetings and saying, why do I have to pay
this extra money? I don't think there is anybody here who will
disagree with this--you would help us a lot, Doc, if you could
find a way to do away with this potential notch.
Dr. MCCLELLAN. I very much appreciate your commitment to
helping everyone possible save under the drug benefit. I am
sure we will keep talking about this not just now, but soon
after May 15 as well.
Chairman JOHNSON OF CONNECTICUT. I would like to recognize
now Mr. McCrery, in whose district 73 percent were signed up in
the middle of April.
Mr. MCCRERY. Thank you, Madam Chair. I thank both of you
for appearing today. I also want to say what a good job CMS and
Social Security and the Department of Health and Human Services
(HHS), for that matter, have done since the early rollout of
this program.
We all know there were problems with the early rollout,
everything from speedy payment, pharmacies, to dual-eligible
seniors having problems, some drugs being dropped or not
covered. CMS, HHS, jumped on that with both feet, and you
haven't let go since. You have just done a fantastic job of
admitting that there were problems and getting after them and
solving them.
The SSA has done a wonderful job of reaching out to seniors
and offering your outreach to seniors all across the Nation and
trying to help seniors understand this program and to get help
getting signed up for this program.
So, I think, particularly for those of us from Louisiana,
it is refreshing to be able to compliment Federal agencies for
a change. You certainly deserve it.
Dr. MCCLELLAN. Thank you.
Mr. MCCRERY. Dr. McClellan, you talked about the premiums.
I think, originally, weren't premiums projected to be about $35
or $37 a month?
Dr. MCCLELLAN. Thirty-seven dollars a month, yes.
Mr. MCCRERY. Thirty-seven dollars a month. Now they are
between $20 and $25, on average?
Dr. MCCLELLAN. That is right. It is about $25, on average.
Overall, the Medicare Advantage plans have premiums that are
significantly lower than that, on average.
Mr. MCCRERY. What do you think accounts for the difference
in the original projections and what is reality?
Dr. MCCLELLAN. I think it is two things. First of all, it
is the strong competition that we have among the drug plans.
They know that they have got to offer strong discounts, low-
cost effective coverage, or they are not going to get
beneficiaries.
Second, we have seen some very impressive shopping behavior
by our beneficiaries. They are overwhelmingly enrolling in
plans that are relatively low cost. That is good news for them.
They are getting much lower premiums as a result. It is good
news for taxpayers because the cost of the benefit is coming
way down as a result.
Our Trustees Report, issued this week, pegs the drug
benefit cost to be 20 percent lower than had been projected as
recently as last year, before these premium bids and before we
saw the actual choices that our beneficiaries are making.
Getting back to Congressman Stark's questions, 1 in 4 of
our beneficiaries is signing up for a plan that has coverage in
the gap. So, the plans are responding, not just with lower
costs but also with coverage, more like with what many people
want. So, I would give a lot of credit to our beneficiaries
making informed choices. It takes some effort, but I would also
give a lot of credit to all of our partnerships in networks to
help people make an informed choice. That can be as simple as
calling 1-800-Medicare or going to one of these thousands of
events around the country.
Mr. MCCRERY. So, private sector competition seems to be
working after all.
Dr. MCCLELLAN. Private sector competition plus
beneficiaries choosing the coverage that they want, not the
coverage that others tried to design for them.
Mr. MCCRERY. Are you familiar with the recent survey from
the pharmacy benefit managers trade group, Pharmaceutical Care
Management Association, in which they track the top 25 drugs
purchased by seniors and show the costs at retail pharmacies
and under the program and through mail order programs?
Dr. MCCLELLAN. Yes, I think I have seen that, sir.
Mr. MCCRERY. They show discounts of 35 percent to seniors
at retail pharmacies--seniors who are in the Part D program--
and 46 percent through mail order. A lot of seniors can do mail
order because they have maintenance drugs that they know they
will need every month so they can do it through mail order.
Sometimes they have to go to retail pharmacies, but a lot of
them can get it through mail order. So, that is a big savings
that they can get through mail order.
However, CMS, I understand, for those that signed up for
the lowest-cost plans, they can get discounts of 57 percent to
71 percent in those low-cost plans. That is a huge savings for
seniors. I think you earlier stated that the average savings
per senior who signed up for Part D is $1,100; is that right?
Dr. MCCLELLAN. That is right, it is 50 percent.
Mr. MCCRERY. It is about $100 a month these seniors are
saving. That is just the average.
Dr. MCCLELLAN. One other way to look at it, if you don't
mind, is our actuaries in February issued their projections for
national health expenditures. For 2006, the first year we have
full implementation of the drug benefits, their estimates of
total prescription drug spending in the United States have come
down significantly because of exactly what you mentioned: the
substantially lower prices that seniors are now getting on
their drugs.
Even though seniors are getting millions more prescriptions
filled because of the coverage, it also brings down the cost of
drugs, so it is many more prescriptions, but less total
spending on prescription drugs in this country as a whole this
year, because of the drug benefit.
Mr. MCCRERY. What is happening--I will see if you agree
with me--but what is happening is seniors are now in
pharmaceutical plans, drug plans, that are like the one I had
through the Federal Employees Benefit Plan.
I was paying less for my drugs than I would have paid had I
not had a plan and just walked down to the corner drugstore and
paid retail for it, because I got a discount through my health
plan. Now we are giving seniors a discount through their health
plan, Medicare, through Part D. That is what is happening.
Now, my time is out, but I hope somebody will talk about
the low-income seniors and how we are taking some of the burden
off the States, who were previously paying the cost for those
seniors, and how if the States want to, they can supplement
Part D and actually make those seniors whole or even better off
than they were.
Dr. MCCLELLAN. Many of them are.
Mr. MCCRERY. Thank you.
Chairman JOHNSON OF CONNECTICUT. Thank you.
Now I would like to recognize Mr. John Lewis of Georgia who
has about 69 percent of his seniors--sorry, 69 percent of the
seniors in his district signed up. Mr. Lewis.
Mr. LEWIS. Thank you very much, Madam Chair.
Dr. McClellan, in your response to the question raised by
my colleague from Louisiana, are these the same actuaries who
said that this plan was going to cost about $400? Are they
using the same people?
Dr. MCCLELLAN. Those are the same people. That was the
April estimate from 2004 to 2013. We are now looking at 2006 to
2015 and the cost projections are right in line with what the
actuaries had forecast back then.
Mr. LEWIS. You are really telling us that these wonderful,
unbelievably qualified people hit the dime on the head?
Dr. MCCLELLAN. Very close to their original estimates. Back
in February, when the President's budget came out, our
actuaries compared a comparison.
The trillion dollars I think that Congressman Stark--I am
not sure where he got that from. I am sure he can explain more
clearly than I. Some estimates are of the so-called gross costs
of the benefits that do not count the savings from premiums,
that do not count the savings from State payments for a portion
of the costs that they would have incurred, that do not count
all the savings in Medicaid.
If you look at the net cost of the Federal Government, as
our actuaries did in that comparison in February, which we
would be delighted to share with you, they are roughly in line
with what had been forecast a couple years ago.
Mr. LEWIS. Doctor, let me ask you, have you seen the GAO
report that was released today?
Dr. MCCLELLAN. I have.
Mr. LEWIS. Do you care to comment on the report?
Dr. MCCLELLAN. Thank you for asking. I do have a few
comments on it. While I think it is very important for us to
look at input and feedback from any source, I am very concerned
about the report being incomplete and inaccurate and out of
date, at least as some people are interpreting its findings. I
can tell you a little bit about that.
Mr. LEWIS. Doctor, the report is saying that much of the
information that was sent out by you and CMS was inaccurate and
misleading, incomplete, too complicated for seniors. It
suggested that many of the seniors that you want to sign up,
they have only a fourth-grade reading level, and that much of
the information you sent out was for people who could read at a
seventh-grade level or maybe a college level. Do you care to
comment?
Dr. MCCLELLAN. Absolutely. Again, there is a lot more I can
say about this, but on the specific point that you raised about
reading level, first of all, we have not been able to see the
methods that GAO used. We asked them to share them with us, but
they would not release them. If it is as described in their
summary statements, their reading level determinations are
based largely on syllable counts, the number of syllables in
the words in the documents that they reviewed, what we found is
that is a partial but not complete way of looking at how easy
materials are to understand. There are some words that our
beneficiaries need to know that have multiple syllables that
many of them do understand, words like ``Medicare'' or
``prescription'' or ``beneficiary.'' In cases where we use
these, we will use the words to make sure that we are clear and
accurate about what beneficiaries need to know. It does mean
the syllable count goes up.
We have had our materials reviewed by many independent
groups that focus on plain language and clear communications;
and those results which we compiled in our response to the GAO
had very different conclusions about the ease of readability of
the materials. In fact, the Medicare new handbook has won
awards for its plain language.
Mr. LEWIS. To consistently tell people to go on line; if
you want information, go on line. Apparently 70 percent of the
people that receive Medicare have never been on line and they
never use a computer. They do not know anything about a Web
site or iPOD, whatever these things are.
Dr. MCCLELLAN. iPOD things, whatever they are. I could not
agree more that is why going on line is only a small part of
our diverse grassroots outreach campaign. In Georgia we are
partnering with faith-based organizations, counseling groups
like Georgia Cares and the Georgia health insurance counseling
organizations, to get into people's neighborhoods for face-to-
face talking about what the drug benefit means for them.
People can also call us anytime. We have more than 6,000
customer service representatives, and that is why we have been
able to get our minority enrollment, and that is why you have
been able to get enrollment in your district to run ahead in
our national average in many respects.
Mr. LEWIS. Do you think all of these are exceptional
circumstances that would justify extending the May 15
enrollment deadline?
Chairman JOHNSON OF CONNECTICUT. Excuse me. It has just
been called to my attention that Dr. McClellan has to leave at
4:00. There are enough Subcommittee members here so that if we
each stick tightly to 5 minutes, we may not all get to question
him. So, I would like to ask you to suspend the rest of your
questions, since your time has expired, and anyone else who can
keep their questioning to 4 minutes out of respect for other
members so we can get through everybody, that would be great.
Dr. MCCLELLAN. We will be happy to answer more in writing.
This outreach is very important to us.
Mr. LEWIS. Thank you.
Chairman JOHNSON OF CONNECTICUT. Thank you. Mr. Johnson.
Mr. JOHNSON OF TEXAS. Thank you, Madam Chairman, I
appreciate it. Listen, I think you guys have done a super job
and I do not know if you have answered the question yet, but
the effect of eliminating the May 15 deadline; have you talked
about that already?
Dr. MCCLELLAN. We have and how that would reduce enrollment
in the program.
Mr. JOHNSON OF TEXAS. How do you propose that half of the
beneficiaries are not aware of the deadline?
Dr. MCCLELLAN. At this point, about 85 percent-plus of our
beneficiaries have drug coverage that is secure. Mostly it is
through the new Medicare drug benefit, and those beneficiaries
do not need to focus at all on any deadline. They are in
coverage. They are not going to pay any penalties. They got
protection for the rest of their lives against high drug costs.
For the ones who are left, it is about 15 percent, and even
half of those qualify for the low-income assistance, and they
will have chances to enroll after May 15. So, it is really only
a small part of our population that we still need to reach. We
want to make sure they know about the deadline, but most people
have moved on. They are using the coverage, they are saving
money, and they are satisfied with it.
Mr. JOHNSON OF TEXAS. I agree with you. I would like you to
emphasize that the lower income do not have a deadline, in
effect. You will help them get the coverage regardless of the
time frame.
Dr. MCCLELLAN. That is right.
Mr. JOHNSON OF TEXAS. What would happen among plans if the
Secretaries were allowed to negotiate prices?
Dr. MCCLELLAN. Congressman, I get asked that question a
lot, so I have made a point of discussing it with our actuary
and his staff who did an independent evaluation of proposals.
As he reiterated again recently, there is no evidence that
government negotiation would lead to lower prices than what we
are seeing with a strong and aggressive price negotiation that
the drug plans have to use in order to get people to enroll in
their plans. They have gotten prices way down and compared to
our experience in Medicare Part B, where Medicare did cover
some drugs using price regulation for a long time there, we
have moved to a new competitive system for pricing the drugs
and we have saved billions of dollars. So, according to our
actuaries there is no evidence that price negotiation would
drive down costs any more.
I think it is especially important to be careful about
government controls on access to drugs, and which drugs you
take, when there are so many new medications coming along and
when beneficiaries being able to get access to the medicines
they need is constantly changing and needs to stay up to date.
Mr. JOHNSON OF TEXAS. Choice and free enterprise work, do
they not.
Dr. MCCLELLAN. It seems to.
Mr. JOHNSON OF TEXAS. Thank you very much.
Chairman JOHNSON OF CONNECTICUT. Thank you very much, Mr.
Johnson.
Mr. Doggett.
Mr. DOGGETT. Thank you very much, Doctor, for your service
and for your testimony. I wish you well in signing up as many
people as you can possibly get. As much as I deplore what I
think are many of the deficiencies in this legislation, I
personally join in that effort to try to get as many people in
the south Texas area that I represent signed up.
Dr. MCCLELLAN. Thank you.
Mr. DOGGETT. Just continuing with Mr. Johnson's line of
questions then, I guess you have concluded, then, based on
talking to the actuary, that we should repeal the negotiation
authority to the Veterans Administration that gets less
expensive prescription drugs for our veterans than any of these
plans provide under Part D.
Dr. MCCLELLAN. I do not think I would say that. The
Veterans Administration is a good program for veterans. It
works well for them.
Mr. DOGGETT. It sure is. You are familiar with the Families
USA study that it is so good that it provides prices on, I
think, the top 20 most prescribed pharmaceuticals that are
about half what your best plans under Part D are providing.
Dr. MCCLELLAN. For the drugs that are on the Veterans
Affairs (VA) formulary, that is true. A lot of drugs are not.
Mr. DOGGETT. That is a pretty significant savings. Even by
any standard a 50 percent savings--I think to actually be
accurate, it was 48.2 percent--less than the government is
paying through the veterans program, where we negotiate prices,
than we are paying under this great system that has been set up
that we are talking about today. That plan also is one that has
been evaluated by our staff over at the Government Reform
Committee. They show that actually there has been an increase
in prices of these Part D plans from December to February.
Does your office study the changes in prices that are
available?
Dr. MCCLELLAN. We have been watching that very closely. We
sent a response letter to Consumers Union, who also picked up
on part of the same study that you saw that pointed out some of
the problems with minority staff's study on the Government
Reform Committee. Basically the only price changes that we are
seeing are changes in the so-called Average Wholesale Price for
a drug that applied to every program, including the VA. Many
Medicare beneficiaries have chosen plans with flat copays that
stay the same for the whole year for their drugs, and so are
protected even from those kind of changes in prices. We would
be happy to share with you the details of that. The prices and
savings have remained stable over time, overall, and they have
actually increased.
Mr. DOGGETT. I think it would be helpful to add as you
filed other documents with your testimony, those studies as
well----
Dr. MCCLELLAN. We will get that letter into the record.
Mr. DOGGETT [continuing]. that your actuary has provided
that are critical or are objecting to price negotiation.
Dr. MCCLELLAN. We are happy to do that.
Mr. DOGGETT. As far as the study that my colleague, Mr.
Lewis, was just asking about on the GAO, I understand you do
not have all of your discussions back and forth between your
staff and their staff about how they did what they did, but you
are aware that they reported that one 1 of every 3 times that
someone calls in to CMS, they get the wrong answer or they get
no answer or they get an answer that is incomplete and
inappropriate.
Dr. MCCLELLAN. Well, I would like to just correct your
statement, because that is an incorrect interpretation of what
the GAO did. They did not look at any actual calls that
beneficiaries were making. They made up five questions and they
looked at those questions which did not even apply to most of
the tools that we have available. They did not really even look
at our toolbox. They dusted off a hammer and got that out and
did not even look at our power tools. Our power tools, which
are what most beneficiaries use when they call us, rely on
personal information from the beneficiary. They tell us who
they are, and then we give them personalized support in making
a decision. The GAO did not even look at any of those calls,
and that is the vast majority of calls that come into us.
If you look at the actual calls coming into the Medicare
program, the satisfactory rate of beneficiaries that call us
with the information they get is 87 percent and the ongoing
evaluations of the accuracy of the answers is 93 percent. So,
that analysis was not based on actual calls by actual
beneficiaries, which is what we are really focused on.
Mr. DOGGETT. Perhaps we can pursue that--since the time is
up--in a future hearing, because the actual report refers to
incomplete, inaccurate, and unusable answers. I have hope you
will file your response with your testimony.
Dr. MCCLELLAN. It is with the GAO report. You can see it
now.
Chairman JOHNSON OF CONNECTICUT. Thank you, Mr. Doggett.
The record really should note that the VA formulary excludes 20
of the 33 most common brand-name drugs used by seniors, and the
VA system delivers drugs to only 429 VA pharmacies; whereas the
Medicare prescription drug benefit is delivered to 54,371
pharmacies.
Mr. CAMP.
Mr. CAMP. Thank you, Madam Chairman.
Welcome. Dr. McClellan, this GAO report that we have heard
referred to, it seems many of the observations they made were
the early days of the program. How do you respond to the fact
that it seems that GAO's findings really apply to information
that is out of date?
Dr. MCCLELLAN. It is very much out of date. In our response
to the GAO report, we listed what we have done on each of the
four specific recommendations that the GAO made. Some of these
were kind of technical recommendations. One of the main reasons
they scored one question as being an inaccurate response is
because we talked about the savings from generic drugs, for
example, and they thought, well, if there is a generic version
of a drug, you should not automatically tell a beneficiary
about that. I personally think that is exactly what we ought to
be doing because they can offer so much savings and they are
exactly the same drug, but we have since modified our script to
let people look first at the overall cost of their brand-name
drug if that is what they really want.
Again, I do not think that is the right thing to do,
speaking as a doctor, if you want to save money safely on your
medications. So, in that area, in each area we have made major
further steps in improving our tools since the report was done
in January.
Mr. CAMP. I want to thank you for all the hard work your
Agency has done in enrolling millions of beneficiaries in the
prescription drug coverage. I also want to personally thank you
for the responses to my office that have been very very timely.
Over 70 percent of the seniors in my district are benefiting
from the program and surveys show an overwhelming majority are
pleased with their coverage.
My question is how is CMS and HHS working together to
expedite approval of the patient assistance program? I have
heard some concerns from people who were covered by one of the
plans in the past. That is obviously changing. Can you comment
on that?
Dr. MCCLELLAN. I sure can. The Office of the Inspector
General has provided a clear road map for how manufacturers can
continue their assistance programs, in addition to Part D, just
as they had before. I am very pleased that a number of drug
manufacturers like Schering-Plough, like Merck, have come
forward and done the right thing and continued their programs.
I personally think it is unacceptable for any drug
manufacturer to use the start-up of Medicare Part D as an
excuse to cut back on assistance to beneficiaries who still
could get help in addition to Part D. This should be a win-win
for the manufacturers and for the drug beneficiaries when it
comes to assistance programs, because many beneficiaries who
previously needed the manufacturer program now qualify for
extra help. They have got comprehensive payments for their
drugs. There are still some that have incomes between, say, 150
or 200 percent of poverty that will get some help from the
Medicare drug benefit but could use the assistance program in
addition.
The Office of the Inspector General has provided a clear
road map for how manufacturers can do that. Some of them, like
Merck, did not even need to get a specific opinion for their
own program because they are following the road map. That is
what I hope all manufacturers will do.
Mr. CAMP. Thank you. Quickly, before my time expires, the
pharmacists have been a big help in this program and many are
concerned about timely payment. How is CMS addressing those
issues?
Dr. MCCLELLAN. We are firmly supporting pharmacists and
making sure their contracts are enforced for timely payment. If
any pharmacist is having difficulty with a drug plan meeting
the terms of their contract to pay on schedule, they should let
us know. We have handled some complaints in that regard and
gotten them resolved. At this point we are seeing a very low
number of complaints related to payments being made according
to a contract.
Mr. CAMP. Thank you very much.
Chairman JOHNSON OF CONNECTICUT. Thank you. It is very nice
that the last three members to question have either 71 or 72
percent of their seniors signed up in this program.
Now we turn to Mike Thompson of California.
Mr. THOMPSON. How many people do I have signed up?
Chairman JOHNSON OF CONNECTICUT. In your district, 72
percent are signed up.
Mr. THOMPSON. Seventy-three thousand four hundred and nine-
five, according to your data, Doctor. Thank you for providing
that. What I do not know is how many of these 73,495 people
that you have told me have signed up were not getting some
sorts of benefit before? We have asked you or your office for a
breakdown in those numbers, and we were told that that is not
available. Will that be available sometime soon?
Dr. MCCLELLAN. I will certainly look into it. I know we
have made available that information at the county level and we
will look into providing some additional numbers. We have put
out an awful lot of information lately of these county-level
breakdowns.
Mr. THOMPSON. I would be interested to have the county
level. I have got all or part of seven counties, and I would
love to see it on that basis, if nothing else because it is one
thing to state for certain, as the Chair has been doing, that
these people have received coverage under this program. Maybe
they have. I hope they have. I hope the more people that we can
get in the better, but I think it is important for us to know
the facts of this. How many are getting it now that didn't have
coverage before?
Dr. MCCLELLAN. Many are getting much better coverage. Many
people in your district with Medicare Advantage plans have much
more comprehensive coverage. Many have much more secure retiree
coverage. That coverage had been going away. We are keeping it
in place.
Mr. THOMPSON. If you give me the data that we asked for, we
won't have to argue it across the dais. We will have it for
sure.
Doctor, is it your understanding--and you may have covered
this while I was out at another meeting, and I apologize if you
have--is there any interest in, or do you suppose that we are
going to extend this May 15 deadline?
Dr. MCCLELLAN. We do not have the authority to do that.
Mr. THOMPSON. Do you see, from your vantage, that
happening?
Dr. MCCLELLAN. As I said before, what we are seeing, what I
see when I go around the country is seniors who are focusing in
on this because the deadline is coming up. Most people do not
do their Christmas shopping in August. They wait until closer
to the deadline, and now is when we have put tremendous
resources and all of our partners around the country and in
your district are doing a lot of work to help people get their
questions answered and make a confident decision, so now is the
best time to look into the program.
Mr. THOMPSON. I appreciate that, but I just want to point
out that there was another deadline that has come and gone, and
that was the deadline for States to take action to get folks
into the program. The States, unfortunately, did not have a
Federal Government partner that met its fair share of that
deadline, and you guys did not meet your deadline, so different
States have had to come up with funding to provide
prescriptions to folks who otherwise would not have had
prescriptions. As a matter of fact, in California there has
been 815,700 prescriptions paid for by the State, at a total of
$60 million, just in the month of April; 178,000 at $15
million.
So, I would hope that we are not holding the beneficiaries
to a different standard than the Federal Government is having
to hold up to. I would be interested in knowing when States,
California included, can expect to get reimbursed for this.
On the issue of partners, I just want to point out that one
of the best partners has been the State Health Improvement
Plans (SHIPs), Health Insurance Counseling and Advocacy
Programs (HICAPs) in California. If you look at the numbers,
they are doing 20 times the normal caseload and they get about
80 cents per beneficiary for the work that they do. I would
argue that you would have just terrible statistics if it were
not for these HICAPs and the like organizations in other
States.
Now they are going to experience a further cut in their
benefits. These are people--I have one small county that used
to get 200 calls a month. Now they are getting 200 calls a day,
and we are going to cut their funding. How do you determine
what the funding is?
Chairman JOHNSON OF CONNECTICUT. I am sorry, I have to cut
you off.
Mr. THOMPSON. Maybe you can get back to me.
Dr. MCCLELLAN. I want to make sure these are issues that I
can clearly respond to. With respect to the State payment, we
worked out a framework and a schedule for carrying out that
framework with a bipartisan group of State Medicare directors.
We are just kind of following their lead so that the States
will get paid back in the way that is easiest for them. Your
Medicaid Director, Stan Rosenstein, was one of the members of
that Committee. We are implementing that on schedule.
California sent in their first round of data for that process,
and we will be carrying out the reimbursement according to
schedule for the States that followed through on the approach
that they wanted for this reimbursement process.
With respect to partners like HICAP, I could not agree more
that they are tremendously valuable assets and partners in
making this program available and effective for all of our
beneficiaries. We have more than doubled the funding for HICAP
over the last few years. I will permanently keep that funding
level high. We have also vastly expanded the use of other
partners in your district, around California and around the
country, to help take some of the load of more personalized
connections with our beneficiaries. We will keep that in place
too.
Right now we are helping people find out about drug
coverage. In the years ahead, it will be great for helping them
close the prevention gap by using our preventive benefits and
our drug benefits more effectively. So, this is a permanent new
part of the Medicare program, and I want to support them much
more strongly than has ever been the case in the past.
Chairman JOHNSON OF CONNECTICUT. Mr. Ramstad.
Mr. RAMSTAD. Thank you, Madam Chairman. Thank you for your
important leadership on the Medicare prescription drug benefit
from day one. I also want to thank our two witnesses for your
excellent testimony.
Dr. McClellan, my home State of Minnesota, thanks to the
leadership of Governor Pawlenty, was one of the States that
stepped up to the plate with Medicaid dollars to fill the gaps
when there were initial problems with the dual-eligible
population. I am sure you agree that seniors and people with
disabilities never should have faced those difficulties. There
were really some major problems during the start-up of the
program. to your credit, when the States started filling up the
gap, you stepped in and announced that CMS would reimburse
States that did step up to the plate to fill the gap with dual-
eligibles, and I appreciate your leadership at that time as
well.
I have two questions. One, can you assure us that CMS is
taking every possible step to ensure that dual-eligibles never
face those obstacles again? Second, when can the State of
Minnesota expect to be reimbursed?
Dr. MCCLELLAN. On the first question, as you said, starting
on January 2 we began taking further steps to address the
issues that arose for some of our beneficiaries. While the vast
majority of our beneficiaries have been using the coverage
effectively from the start, too many were having difficulty at
the beginning, and so we took new steps like implementing new
data transfer procedures with the States and the drug plans.
We now do bi-monthly checks, twice a month, to make sure
the plans with dual-eligible beneficiaries have up-to-date and
complete information on their enrollment data and their
copayment data to make sure those steps are done correctly.
We have also worked with the States, where there had been
trouble with handoffs, to eliminate those difficulties; and
that has been an ongoing process. We have also implemented some
further steps with the plans for more timely transfers of data
and more effective monitoring of the charge information in the
pharmacy computer system, the so-called ``for our arts data.''
As a result, we have seen a vast reduction in the rate of
problems arising at the pharmacy counter, people being unable
to fill their prescriptions easily.
We did not stop there. We also have in place a casework
tracking system so if any beneficiary does have trouble, we
have a well-established business process between us and the
plans, to resolve it quickly. We have been seeing a declining
number over time, from month to month, of the cases where we
need to intervene and provide this help, but it is there. So,
any beneficiary that is having difficulty can follow up with us
to work to get that resolved as quickly as possible.
Mr. RAMSTAD. So, it is fair to say, in summary, that
quality controls are in place?
Dr. MCCLELLAN. Absolutely, and we have been tracking----
Mr. RAMSTAD. When can the State of Minnesota, before my
time runs out, expect to be reimbursed? I am asked that
question all the time at home.
Dr. MCCLELLAN. That is right. Congressman Thompson asked
that question as well. We have set up a process with the States
that follows the procedure that the States wanted to follow to
minimize their burden. There is a time frame in there. We need
to get data from Minnesota on the people who they want
reimbursement for, and then summary information on those
claims. As long as Minnesota follows that schedule and that
framework that we laid out, they will get reimbursement. I
expect that generally to occur by June if they provide us the
data that they have agreed to provide us.
Mr. RAMSTAD. Thank you.
Chairman JOHNSON OF CONNECTICUT. Thank you.
Mr. ENGLISH. Thank you, Madam Chair. Just to clarify
something, Dr. McClellan, I think that you alluded to earlier.
Today, as we know, the GAO released a report regarding CMS
operations outreach and communications with beneficiaries about
their options under the new Medicare program. We have
referenced that earlier in this hearing. We are told that GAO
found many times beneficiaries were given incorrect answers to
basic questions, but it seems many of the observations made by
the GAO, as has been noted, dated to the early days of the
program.
First, how do you respond to the GAO findings directly, and
is the information, in fact, yesterday's news? What has the CMS
done to correct the issues highlighted by the GAO?
Dr. MCCLELLAN. Well, we have a number of concerns about the
way the GAO report was presented, which I think makes it
incomplete and inaccurate and out of date. It is incomplete in
the sense that it didn't look at most of the tools that we
actually use and that our beneficiaries prefer for getting
information about the drug coverage.
For example, most of our beneficiaries give us their
Medicare number when they call us or when they go on line, so
that we can provide personalized assistance to them. The GAO
did not evaluate that part of our outreach and education
program at all. Even in the cases where they did look at our
answers, they scored us as being inaccurate, when in fact they
simply did not get information because they did not provide
this beneficiary number.
Now we have made clear that you can get information even
without providing a beneficiary number. When they actually
looked at it, in the vast majority of cases they got the right
answer. So, incomplete evaluation. Also, they asked questions
like: Can people compute with paper and pencil their out-of-
pocket drug costs for the standard plan? Well, we have tools
that beneficiaries are using to compute their drug costs so
they do not have to do it by hand. It is much more complete
information on predicting your cost for a year than has ever
been available in any insurance program. So, that was not
evaluated. So, incomplete and inaccurate as a result of not
really looking at our whole tool status. It is like taking a
screwdriver and trying to use it to hammer in a nail, and not
even using any of our power tools at all.
The evaluations of actual beneficiary calls during February
and March have shown satisfactory rates by beneficiaries around
86, 87 percent, and accuracy rates for these calls, the actual
calls that beneficiaries make, of 93 percent.
There are many other independent and third-party
evaluations that have gone on before, during, and after this
time of our tools as well that come to similar conclusions, and
those are all incorporated in our response to the GAO.
Finally, as you said, it is out of date. This looked at the
circumstances in January. We have made a lot of improvements in
the program since then, including specific responses to the
recommendations of the GAO. Our goal is to make sure that our
beneficiaries can get the help they need when they want to
enroll in coverage, and that is reflected now in the hundreds
of thousands of calls that we are answering every day, the tens
of thousands of people that are enrolling in coverage every
day, and the very high rates of satisfaction with that coverage
and the savings that our beneficiaries are getting.
Mr. ENGLISH. Thank you for your comprehensive answer which
has exhausted my time. I yield back.
Chairman JOHNSON OF CONNECTICUT. Mr. Emanual.
Mr. EMANUEL. Doctor, I know we talked earlier about some of
the cost savings here. If I am not mistaken, the original price
of the prescription drug bill was $394 billion, and even with
those savings it is way over $394 billion. It is not even close
as an evaluation. I think the number I saw the other day in the
report is that it will come in at $800 billion; and even, by
standards in Chicago, that is twice as much as originally
projected and originally told to Members on the floor.
So, I compliment that there has been a, quote-unquote, 20
percent savings over the trillion-dollar figure, but it is
still twice as much as the original 400 billion or $395 billion
originally quoted on the floor and told to both Members, the
public, and, most importantly, the taxpayers.
It gets to the issue--and we go around and around on this
subject--as a leader and somebody who is taking the leadership
both in reimportation as well as the issue of direct
negotiations, I know you know of the study done by the Center
for Economic and policy research, a nonpartisan group. You are
familiar, I am sure, with the study.
Dr. MCCLELLAN. I do not think I looked at it recently, but
I am sure I have seen it.
Mr. EMANUEL. They say there is $40 billion worth of savings
if you do what the VA does or Australia does, which is direct
negotiations. Rather than have this fight of direct
negotiations versus private subsidized plans, I still do not
understand this ideological, almost theological obsession about
negotiation. Why will we not have Medicare negotiate, private
plans do theirs, and let the public choose which one they want?
If it is all about choice, which has been the rhetoric that
you always say--and I appreciate that--why would we prevent
choice?
Dr. MCCLELLAN. Beneficiaries do have a choice.
Mr. EMANUEL. No disrespect. I do know something about spin.
I asked a specific question. Why would we prevent choice
between direct negotiations by Medicare and the negotiations
that either United Health, WellPoint, or any of the other plans
provide? Why would we prevent the consumers, that is, the
senior citizens, from having the choice, that basic market
decision, because both choices--that competition would drive
prices down. Why would we prevent the seniors from having
choice, which was the selling point of this plan, which a
number of us opposed?
Dr. MCCLELLAN. I am all for seniors having choice.
Mr. EMANUEL. Good.
Dr. MCCLELLAN. It has to be choices between specific real
proposals, and I have not seen any specific real proposal along
the lines that you have described that has been scored as
saving money, that would operate in real neighborhood
pharmacies, not the VA.
Mr. EMANUEL. Dr. McClellan, there has been from GAO to this
study, we can submit: Listen, if you want go to my Web site, I
will give you another choice. I list Costco in Chicago; Costco
in Toronto; 500 miles apart. Costco, bulk purchaser,
negotiator. The Costco in Toronto every month, and we update it
for the same drugs, same milligrams, same doses. The Costco in
Toronto is always over $1,000 cheaper than the Costco in
Chicago. I will accept the theology of you and the philosophy
of choice. Bought in. Done. Sold. Let's have a competition and
choice between a Medicare negotiation price versus United
Health, WellPoint, and any of the other 43 plans.
I want choice. Not a conscripted choice; a choice of direct
negotiations or private market negotiations. Let's have choices
and then let the consumer choose.
Dr. MCCLELLAN. I am not sure what the question is. If it is
about should Medicare rely on drug importation for all of its
seniors, I am not sure the numbers work out.
Mr. EMANUEL. That is not what I asked.
Dr. MCCLELLAN. Are you asking for a VA option in Medicare?
Mr. EMANUEL. Sure.
Dr. MCCLELLAN. That comes with--I would like to see the
specific proposal, because that would come with a very narrow
access to pharmacies, a 75 percent use of mail-order
prescriptions rather than community-based prescriptions--which,
as you know in Chicago, is the way that most of your seniors
get their drugs now--and would come with a specific government-
determined formulary and specific government-determined and
government-paid staff positions, government-owned hospitals, a
very strict network of care. It works great for VA
beneficiaries.
I am not sure it is the model that Medicare beneficiaries
in this country want. They like choices of doctors. They like
choices of pharmacies. I would like to see the specific
proposal.
Mr. EMANUEL. I spend time with seniors, since I have the
oldest population of any of the 19 congressional districts in
the country.
Chairman JOHNSON OF CONNECTICUT. I am sorry, Mr. EMANUEL.
We do want to get through.
Mr. Hulshof.
Mr. HULSHOF. Thank you, Madam Chairman.
Dr. McClellan, it has been suggested that perhaps you will
do something about this May 15 deadline. While you are at it,
would you do something about this pesky April 15 tax deadline
while you are at it?
It was also referenced to you and your boss, Secretary
Leavitt, when you and your other boss, the big boss, when you
and the President came to Missouri recently--I mean no
disrespect--the two of you were upstaged by the three
Missourians on stage with you.
It is a constructive critique but exactly--the gentleman
who is healthy, who did not take prescription drugs, who signed
up anyway as you recall; or the woman, delightful woman who had
12 medications and she went on line and talked about the $200 a
month she was saving with the choice; and even the old dairy
farmer who said he knew his way around a dairy cow but not
around a computer, and yet 1-800-Medicare gave him real
savings.
So, especially the steady success, even when our own
colleagues and outside groups call public meetings just to bad-
mouth the program, I think the success we have had on behalf of
America's seniors has been extraordinary.
It was not that long ago we heard predictions, even within
this room, even within this Committee, this will not work. Now
we hear well, okay, maybe it is working but wait until the
doughnut kicks in. We heard seniors will not have choices.
Now the complaint is too many choices. We heard we will
have to legislate the premium because we could not guarantee a
$35 monthly premium. As you pointed out, now many seniors, 95
percent of which have access to premiums half that, should they
choose to make it.
Again, it is great to see the progress and the aggressive
efforts you have had.
Now, here is the question, to follow up on my colleague,
Mr. Camp of Michigan. There are a number of independent
pharmacists in my district, and I have a meeting with several
of them coming up, in fact, on Monday back home in Columbia,
and they are concerned about the new landscape. There is a
suggestion out there--in fact the next panel will suggest that
there needs to be some legislation, a prompt-pay legislation
that would direct plans to pay electronically submitted claims
within 14 days; other claims within 30 days. That is one
proposal, one suggestion. I know there is another one about a
set dispensing fee.
Let me yield to you, then. Are these good suggestions, why
or why not?
Dr. MCCLELLAN. First, let me again express the tremendous
gratitude that we have to the work that pharmacists all over
the country have done, especially in those early weeks of the
program when we were implementing a new benefit for more than
20 million people on the same day. They did a tremendous amount
of work to help people get the drugs they need, and since that
time have been giving us a steady stream of constructive ideas
about how to make the program work better. Those ideas have
translated into some steps that are reducing costs for
pharmacies and helping them improve quality of care as well. I
will talk about those in a second.
With respect to specific legislation, I would like to
obviously talk to you more about any ideas. I am concerned
about proposals that would get us directly involved in
negotiating contracts or setting prices. Those tend not to keep
up with modern medicine and may not lead to the most effective
ways of dealing with care.
I would be particularly concerned about steps that might
actually increase costs of drugs for beneficiaries and for the
overall program. With that in mind, I think there are a lot of
steps that we can and are taking together with the Nation's
pharmacists to reduce their costs and improve quality of care.
Let me give you a couple of examples. With the National
Community Pharmacists Association (NCPA) we have worked with
the health plans to come up with a standard set of codes that
are going to be used for most of the transactions that up until
now have required pharmacists to look things up in a book or
make a call to a health plan.
By having standard consistent coding in the pharmacy
computers for things like prior authorizations or off-formulary
drugs, we can reduce their administrative costs significantly
and make their job easier. That means more time for serving the
beneficiaries that they really care about.
Second, we started a new collaboration called the Pharmacy
Quality Alliance, partially led by the NCPA, but again working
with health plans and consumer groups and really all of the
health care stakeholders to do a better job of identifying and
then supporting high-quality pharmacy care.
I am a physician. I have seen this in my own practice. You
get squeezed with payment rates coming down, and it just gets
harder and harder to make that up on the volume. So, what we
want to do is support a business model I think many pharmacists
want to pursue, where they get paid more when they take steps
to help beneficiaries lower their drug costs and help them get
better quality of care. There are so many ways pharmacists can
do that: by helping to educate people about generics, by
helping them with problems of medication interactions, by
improving medication compliance.
Many patients don't comply with the prescription they get.
That is the next challenge we will meet. We will do it with
help from the pharmacists. So, there are a lot of steps we can
take together to improve pharmacy business, improve quality,
and reduce costs that I think might be worth pursuing in the
short term.
Chairman JOHNSON OF CONNECTICUT. Dr. McClellan, if we could
go to the two members who are not----
Dr. MCCLELLAN. Absolutely, I would be happy to stay for
those.
Chairman JOHNSON OF CONNECTICUT. Mr. Herger of California.
Mr. HERGER. Thank you. Dr. McClellan, in your statement you
write: For the 10-year period of 2006 to 2015 the net total
costs of the drug benefit to Medicare is now estimated to be
about $130 billion less. In addition, the State phased-down
contributions are now projected to be $37 billion less. Not
only have there been reductions in the cost of prescription
drugs, market forces have allowed for more attractive
alternatives for beneficiaries. In fact, CMS research has found
that the majority of new enrollees have chosen plans offering a
plan design other than the standard drug benefit.
Doctor, does CMS have plans to improve the display of
comparable plan information, to make it easy as possible for
Medicare beneficiaries to review plan options and make an
apples-to-apples comparison?
Dr. MCCLELLAN. Congressman, we are taking steps to do that
now that we have got a clearer idea of what beneficiaries
value. As you said, it is not the standard benefit. If we had
tried to come up and guess what benefit package they wanted I
think we might not have gotten it right. Now that we are seeing
what they actually want, we are setting up comparison systems
that focus on the key dimensions that matter to beneficiaries.
What we are seeing that matters is the premium, the overall
out-of-pocket costs for the drugs that can be expected; but
also some important benefit features like whether or not there
is a deductible, whether or not there is a co-insurance,
meaning the beneficiary pays a percentage of the drugs, or a
flat copayment, a flat rate; whether or not there is coverage
in the so-called coverage gap.
Those dimensions seem to be very important to our
beneficiaries and we are improving our side-by-side display of
plans to help beneficiaries focus in the key dimensions that
they are telling us are important to them in their own choices.
Mr. HERGER. Dr. McClellan, I want to thank you for the job
you have done, looking at the magnitude of what you have done,
the job to roll out this entirely new program.
I had a visit in one of my town hall meetings a few weeks
ago with a pharmacist in one of my small communities of
Weaverville, California, and to hear him say how good the
program was working, how happy those that signed up were when
they were coming in. As a matter of fact, he said because the
costs were lower, they were actually purchasing more drugs.
That was because they needed more and they could not afford it
before.
So, again, I think you are doing a great job. We certainly
have a ways yet to go, but considering the challenge, I want to
commend you. Thank you, Madam Chairman.
Chairman JOHNSON OF CONNECTICUT. Thank you. Mr. Becerra.
Mr. BECERRA. Thank you, Madam Chair. Especially thank you
for letting those of us who are not on the Subcommittee to ask
questions.
Dr. McClellan, thank you very much for extending your stay
here. We appreciate that very much. We hope you continue to
work for that eventual goal of getting as many people enrolled
as possible.
A quick question to you, and I am going to try to keep,
Madam Chair, my questions under the 5 minutes. So, please feel
free to gavel me as soon as that red light comes on, if it
does.
The call centers. We know there are some issues with the
call centers. The volume in some cases has increased and,
obviously, for the next 2 weeks we expect it to be much higher
than it has been in the past. I know you had a contractor go
out there to monitor some of these call centers from some of
these plans to find out what is going on. Some are not doing as
good of a job as others.
Would it not be helpful for beneficiaries to have access to
the information that this contractor found out about the call
centers--who is doing well, who is not doing well--so that
these beneficiaries can make an informed decision on which plan
will suit them best?
Some plans have heeded your call to try to be more
aggressive in handling the work that is coming through from
those who are inquiring about their plans. Others are not. I
would think that we would want to let the American public, the
taxpayers, know which plans are really trying to do a good job
of marketing themselves to those they will give money, or from
whom they will get money to offer the plan.
So, you have this contractor who did this examination of
the call centers from the various health plans. Why not make it
available before the May 15 deadline so people can see which
plans are really trying to do the work of attracting their
business?
Dr. MCCLELLAN. We are doing all we can to monitor the plan
performance and so we have got a contractor that is now
checking on the wait times. That full process has been in place
just for a few weeks, and we do not yet have reliable data at
the plan level.
What I can tell you is that we do want to make that
available as soon as possible, when we have reliable estimates.
What I can also tell you is some good news in terms of wait
times. The vast majority of plans are answering the vast
majority of calls in under 5 minutes. As we get more precise
information, we will make it available.
Mr. BECERRA. Can I ask you what more you will be doing to
try to make sure that folks who are not as proficient in
English or are suffering from a particular disability, hearing
disability, speech impediment, those who are going to have a
little bit more difficulty trying in these last hairy weeks to
make sure they do the right thing, that they are given access
to people that can help answer the questions they will have on
making a decision on which plan to enroll.
Dr. MCCLELLAN. That is very important to me because that
describes a lot of our beneficiaries. We have not only ramped
up our whole customer support staff. We have got more than
6,000 representatives. It is all hands on deck between now and
May 15. We have also made sure that all of our help lines, all
of our major Web pages, are available in English and Spanish.
We have increased our partnerships with groups that specialize
in other languages, more than 16.
Mr. BECERRA. The difficulty I have with what you just said
is that we know that the vast majority of seniors, period, have
not signed up to your Web page.
Dr. MCCLELLAN. Call lines, too.
Mr. BECERRA. You have a lot of folks who do not sign on to
the Web page. Those who are limited English-proficient are less
likely to sign on to the Web page as well, and have
difficulties with your call center.
So, I hope what you will do is you will ramp up the
services for those who are really trying to make informed
decisions, but are not gaining access to people who can give
them the information they need.
Dr. MCCLELLAN. That is why we are partnering with groups
like the National Alliance for Hispanic Health. They are
helping us with community-based events. We are doing faith-
based events, I think, in your district. I want to thank you
for the help with supporting many of those. It is that local
grassroots outreach that is really making a difference with
many of these hard-to-reach populations, and we are
accelerating all of that between now and May 15.
Mr. BECERRA. Hopefully, May 15 can be moved back a bit. I
know a number of us are very concerned. We appreciate that you
at least came here to tell us a little bit about what is going
on.
Thank you, Madam Chair. I yield back.
Chairman JOHNSON OF CONNECTICUT. As we close, want to take
one last look at the chart that I talked about at the
beginning. The tallest silo on the left shows that the earned
income tax credit for the elderly, first passed in 1975, still
reaches out to only 68 percent of the eligible seniors.
Medicaid for the elderly only encompasses and touches 60
percent of the eligible seniors. Supplemental security income
reaches only 53 percent. Food Stamp reaches only 30 percent.
So, truly, Dr. McClellan, it is outstanding that you are
moving now beyond the 70 percent and the 80 percent and looking
at the possibility before the May 15 deadline and certainly
through the low-income people that will register thereafter,
you are looking at 90 percent of the 42 million seniors either
in the Medicare program or in a position where they did not
need it and therefore didn't sign up.
To have only 4 million left, I expect you will have by May
15, and with May 15 and the follow-on work of both agencies
with the low-income seniors that have special eligibility, it
is really a powerful performance that you and all the good
workers at CMS and the SSA and your partners throughout the
State and local governments and all of your many partners in
the nonprofit sector have turned in.
The seniors have got it. They are signing up because they
save money. They get protection from poor drug interactions.
They get protection against catastrophic drug costs, equally
important, they get to tailor the program to themselves.
I think it has been broadly missed that whether you go to
the doctor or whether you do not, you pay $88 a month for Part
D. This plan, if you do not use drugs in my district, you can
get the $7.35 variety. In California, I understand they have a
$5.25 variety. I think in some other States they even have a
lower cost variety than that.
If you use a lot of drugs, you can get the higher confident
premium and being covered during the doughnut hole, so to
speak.
So, what is nice about this program is that it is not one-
size-fits-all; government could not provide that kind of choice
to our seniors. Indeed, as they live longer, as they live
healthier lives, having that kind of choice is extremely
important. You, having that delivery system that you have
built, is the only hope that Medicare can begin to focus on
helping seniors use our health benefits, our preventive
benefits, and lead healthier lives and be financially more
secure, therefore.
So, thank you both very much for the hard work of you and
all those behind you, and for your testimony here today. Thank
you.
The Subcommittee will recess for about 10 minutes while we
go over and vote. Maybe even less.
We are going to take the panel right away after the first
vote, and we will be here, then, during the debate on the
motion to recommit and part of the next vote. Then we will have
to hear the rest of the panel when we come back. We will be
back as soon as we can, probably 8 to 10 minutes, and proceed
with Panel II.
Thank you very much Dr. McClellan and Ms. Disman.
[Recess.]
Chairman JOHNSON OF CONNECTICUT. The second panel will
gather. We will reconvene. Ms. Everett, would you please
proceed. Susan Everett of Medicare Today.
Thanks to my colleagues for getting back. We have about 15
minutes, 20 minutes.
STATEMENT OF SUSAN EVERETT, NORTH CAROLINA REGIONAL
COORDINATOR, MEDICARE TODAY, RALEIGH, NORTH CAROLINA
Ms. EVERETT. Okay, I will talk fast.
Chairman Johnson and Members of the Subcommittee, thank you
for the invitation to join you today and for the opportunity to
testify regarding the implementation of the Medicare Part D
prescription drug benefit.
My name is Susan Everett, and I am representing Medicare
Today, a partnership of over 400 national and local
organizations that have spent the last several months providing
information to literally millions of Medicare beneficiaries.
I am a regional coordinator for Medicare Today and have
been personally involved in numerous education and enrollment
events in Virginia--Virginia, Kentucky, North Carolina,
Tennessee, Maryland and West Virginia.
Let me begin by telling you a story about a woman I met at
one of our events. Her name is Doris, and she is from Newport
News, Virginia. Doris originally wanted nothing to do with the
Medicare Part D benefit. She had heard so much negative
commentary about it from critics who were quoted by the media
saying it was too complicated and wouldn't save anyone any
money. She was so discouraged by what she heard that she
decided it wasn't for her.
Then Doris ran into some health complications that required
a new prescription costing more than she could afford on her
fixed income. Her sister convinced her that she should at least
come to the Medicare Today event that we were doing in her
community to learn a little about the program firsthand.
Well, once Doris got there, we not only ran her information
through the CMS plan finder and found a plan that would save
her money, but we also connected her with the SSA official on
site and got her enrolled for low-income assistance. Today
Doris doesn't have to wonder whether she can afford her
medicine or not.
Doris' story goes to the heart of my testimony today. The
Part D implementation process has, by and large, worked. It
hasn't been perfect, but I don't see how any program of this
magnitude could be perfect in its first year of operation.
Because the Centers for Medicare and Medicaid Services created
tools for beneficiaries to use to find the best plans for their
circumstances, and because so many organizations like ours are
on the ground, interacting every single day with beneficiaries,
the implementation process has been a positive one.
In 2005 and thus far in 2006, Medicare Today has conducted
over 2,500 beneficiary events. We have provided information to
over 5.5 million beneficiaries and helped enroll over half a
million, not counting those who enrolled on their own after
attending one of our events. We have trained 175,000 people in
all 50 States so that they are qualified to help Medicare
beneficiaries enroll in the Part D program.
I could fill the rest of this evening with anecdotes about
people who have been helped through this effort, but I want to
give you some empirical evidence as well regarding the
effectiveness of the implementation effort.
The Medicare Today partnership commissioned an American
viewpoint survey of 1,000 seniors in April, asked whether
enrolling was easy or difficult. Seventy-two percent said they
found it very or relatively easy, to just 20 percent who said
it was very or relatively difficult.
We also asked those who were self-enrolled if they
encountered any problems in enrolling; 89 percent said they had
no problems. I think these are very solid results for a major
program in its first year of existence.
We have learned a great deal over the past few months. We
have learned that advertising and mass messaging is important,
but is not a substitute for meeting people and answering their
questions face to face. We have learned that to reach low-
income seniors and to get them the assistance they need, you
have to work through established systems such as Meals-on-
Wheels programs and subsidized housing facilities.
We have also seen the value of public-private partnerships,
having worked very successfully with SHIP programs and Area
Agencies on Aging. A good example of this collaborate effort is
seen in the work of one of our partners, Ascension Health, and
its many hospitals and health services throughout the country.
In Bridgeport, Connecticut, to name one instance, the
parish nurses of Ascension St. Vincent Health Services worked
with the State to have computer-equipped vans at churches to
educate and enroll parishioners. This type of effort has been
very successful and well received.
I want to thank the members of this Subcommittee and this
Congress for creating this drug benefit for my new friend Doris
in Virginia and the millions more like her whose lives are made
better by it.
I hope I have given you a useful on-the-ground perspective
on what I believe has been a very successful enrollment
process. It is my hope and belief that the lessons we have
learned will make the next open enrollment period even more
productive and problem-free.
Thank you, and I will be pleased to answer your questions.
Chairman JOHNSON OF CONNECTICUT. Thank you very much.
[The prepared statement of Ms. Everett follows:]
Prepared Statement of Susan Everett, North Carolina Regional
Coordinator, Medicare Today, Raleigh, North Carolina
Chairman Johnson and Members of the Subcommittee. Thank you for the
invitation to join you today and for the opportunity to testify
regarding the implementation of the Medicare Part D prescription drug
benefit.
My name is Susan Everett, and today I am representing the Medicare
Today partnership, an alliance of over 400 organizations representing
seniors, patients, health care providers, employers, caregivers and
many others. The members of Medicare Today have spent the last several
months working personally with Medicare beneficiaries, providing
information and enrollment assistance to literally millions of
individuals. I am a regional coordinator for Medicare Today and have
personally been involved in numerous education and enrollment events in
Virginia, Kentucky, North Carolina, Tennessee, Maryland and West
Virginia.
Let me tell you a little about what I have learned from meeting
with and assisting hundreds of Medicare beneficiaries, and then I'll be
pleased to answer your questions.
When the Part D enrollment period began last November, I will admit
that my optimism was guarded. We were introducing people to a brand-new
program, and seniors tend to be naturally skeptical consumers. And that
skepticism was heightened by the amount of negative commentary in the
media from people saying the program wouldn't work, it wouldn't really
save seniors any money, it was too complicated.
I met, for example, with a woman named Doris from Newport News,
Virginia. She had heard so much negative commentary about the Medicare
drug benefit that she really wanted nothing to do with it. Then, after
she had some health complications that required a new prescription
costing more than she could afford on her fixed income, her sister
convinced her that she should at least come to the Medicare Today event
we were doing in her community because she had nothing to lose from
hearing a little about the program.
Well, once Doris got there, we not only ran her information through
the CMS PlanFinder and found a plan that would save her money, but we
also connected her with the Social Security Administration official on
site and got her enrolled for low-income assistance. Today, Doris
doesn't have to wonder whether she can afford her medicine or not.
And Doris's story goes to the heart of my testimony today, Chairman
Johnson. The Part D implementation process has, by and large, worked.
It hasn't been perfect. I don't see how any program of this magnitude
could be perfect in its first year of operation. But because the
Centers for Medicare and Medicaid Services has created tools for
beneficiaries to use to find the best plan for their circumstances, and
because so many organizations like ours are on the ground, interacting
every single day with beneficiaries, the implementation process has
been a positive one.
We come to this conclusion from considerable experience. In 2005
and thus far in 2006, Medicare Today has conducted over 2,500
beneficiary events, almost 500 of them in coordination with members of
Congress. We have provided information to over 5.5 million
beneficiaries and helped enroll over half a million, and that does not
include the people who enrolled on their own after attending one of our
events. We have trained over 175,000 people in all 50 states, so that
they are qualified to help Medicare beneficiaries enroll in the Part D
program.
We've learned a great deal as we've gone along. We've learned, for
example, that advertising and mass-messaging is important, but it is
not a substitute for meeting people face-to-face and being able to
answer their questions about a brand new program. We've learned that to
reach low-income seniors and help them get the assistance they need,
you have to work through established systems, such as meals-on-wheels
programs and subsidized housing facilities. And we have also worked,
from the beginning, with SHIP programs and area agencies on aging with
great success. We've learned over the last few months that these
public-private partnerships can make considerable progress in locating
and linking people with the benefits they need.
A good example of this collaborative effort is seen in the work of
one of our partners, Ascension Health, and its many hospitals and
health services throughout the country. In Bridgeport, Connecticut, for
example, Ascension's St. Vincent's Health Services hosted several
events at their facilities and St. Vincent parish nurses worked with
the state and with the Area Agency on Aging to have computer-equipped
vans at churches to educate and enroll parishioners. This type of
effort has been very successful and well-received.
It is my hope and belief that the lessons learned by us, by CMS,
and by other groups like the Medicare Rx Education Network, the ABC Rx
Coalition, AARP and others will make the next open enrollment period
even more successful and problem-free.
I can share with you my personal experiences, but I can also offer
some empirical evidence. The Medicare Today partnership commissioned
the American Viewpoint public opinion research firm to do a survey of
1,000 seniors in April regarding the Part D enrollment process. Asked
whether enrolling was easy or difficult, 72 percent said ``very or
relatively'' easy compared to just 20 percent that said ``very or
relatively'' difficult.
We asked those who were self-enrolled if they encountered any
problems in enrolling. 89 percent said no. Only eight percent said yes.
I think these are very solid results for a program in its first year,
especially one that was launched amidst so much criticism.
Chairman Johnson, there is certainly more I could say, were it not
for the time limitations. Let me leave you, though, with one anecdote
that occurred recently at a Medicare Today event near Lexington,
Kentucky.
At this event, I met an elderly gentleman who wanted to learn more
about the Part D program. I learned through our conversation that he
could not read or write, so that meant it took quite a bit of extra
time to explain the process to him and to tell him how a prescription
drug plan would work for he and his wife. As our conversation
continued, I also learned that he and his wife had been cutting pills
in half, skipping some of their doses and not getting prescriptions
filled because they couldn't afford them. It was an emotional moment
for both of us when I explained that he would save nearly $300 per
month and wouldn't need to cut pills in half anymore.
I want to thank the members of this subcommittee and this Congress
for creating this drug benefit, for this gentleman in Kentucky and the
millions more like him whose lives are made better by it. I hope I've
given you an on-the-ground perspective on the enrollment process, and I
will be pleased to answer your questions.
Chairman JOHNSON OF CONNECTICUT. Dr. Schiesser.
STATEMENT OF HEATH SCHIESSER, PRESIDENT, PRESCRIPTION DRUG
PLAN, WELLCARE HEALTH PLANS, INC., TAMPA, FLORIDA
Mr. SCHIESSER. I am not a physician, but I am flattered.
Good afternoon. I am Heath Schiesser, president of
Prescription Drug Plans for WellCare Health Plans. I appreciate
this opportunity to testify about the implementation of the
Medicare Part D program.
WellCare has been privileged to serve Medicare
beneficiaries for more than 10 years. According to the most
recent data from CMS, approximately 850,000 Medicare
beneficiaries are enrolled in prescription drug plans offered
by our company in all 50 States. Another 70,000 beneficiaries
received prescription drug coverage through our Medicare
Advantage health plans. WellCare is strongly committed on a
long-term basis to meeting the health care needs of Medicare
beneficiaries.
We applaud Congress for enacting the Medicare Modernization
Act of 2003. We thank CMS for its tremendous work in achieving
a largely successful implementation of the Part D program.
My testimony today will focus on three areas: First,
examples of the savings and the value of the Part D program is
delivering to beneficiaries; second, steps we are taking to
communicate with beneficiaries and further strengthen the
program; third, the importance of providing options to
beneficiaries.
WellCare is giving beneficiaries the option of choosing
prescription drug coverage that goes well beyond the minimum
requirements established by the MMA. We are offering three PDP
alternatives across the Nation, all of which offer a $0 generic
drug copay with no deductible and low premiums.
We also offer Medicare Advantage plans that offer Medicare
Part D coverage, along with lower physician and hospital
copays, for no monthly plan premium, including no Part D
premium, in 50 counties across 6 States.
To more clearly illustrate the value the Part D program is
delivering to Medicare beneficiaries, I would like to review
the experiences of two seniors who are enrolled in a WellCare
prescription drug plan. Mike is a Medicare beneficiary in
California, who will probably save about $2,400 this year as a
member of a WellCare plan. He is taking six prescriptions that
would cost about $520 per month retail. By comparison, with our
discounts and the coverage provided by Part D, he will save
about 38 percent this year.
Ann is a Medicare beneficiary in New Hampshire, who will
probably save about $700 this year and avoid the coverage gap
as a member of our Signature plan. She is taking two drugs
whose combined cost ordinarily would cause her to reach the
coverage gap in about November. However, by switching to
generic alternatives, Ann's monthly drug care cost will
probably drop to about $70 per month, which will allow her to
avoid courage gap entirely. Even better, since the WellCare
Signature plan is zero dollars for generic copays, her monthly
copays for those drugs will be zero. As a result, Ann's monthly
premium of about $24 for her Part D plan will probably be her
only expense on prescription drugs for the entire year.
As for how we are working to strengthen the program, I
would like to briefly highlight three key areas. First, in
January, Part D programs across the Nation experience extremely
high call volumes, largely because of problems of eligibility
data and operational difficulties in pharmacies. WellCare moved
quickly to adopt corrective measures, dramatically increasing
our staff, working overtime, and refining our process.
Between January and April, we increased our staffing by
approximately 75 percent. Today WellCare is consistently
delivering service in excess of CMS requirements. Our average
time to answer has been under 20 seconds over the last 2
months.
Also, we adopted transition plans in January, which CMS
subsequently required all plans to extend to March 31. As we
approach the end of this transition period, we took a number of
steps to ensure a smooth shift into the normal application of
our formulary, which have proven to be successful.
Finally, at the industry level, WellCare and other plan
sponsors have been working through our national trade
association, AHIP, to address implementation issues in
collaboration with the leading pharmacy and physician groups.
These are just a few examples of the strong measures that
WellCare and our industry as a whole are taking to help
strengthen the Part D program and assure its long-term success.
I also want to briefly note our concerns with proposals
that would standardize benefit packages under the Part D
program. We believe this is a bad idea for several reasons.
First, millions of beneficiaries would be forced to leave the
benefits they have chosen and enter into a standardized plan
that may not be the best option for their specific needs.
Second, the standardization approach underestimates the
abilities of beneficiaries to make thoughtful, informed
choices.
Finally, we think that instead of focusing on limiting
choices, we need to be focusing on providing beneficiaries with
better information.
Third, the standardization proposals overestimate the
ability of the experts to design benefits that will meet the
beneficiaries' needs.
In closing, I hope you will agree that the Part D program
is providing significant value to beneficiaries, that WellCare
and other sponsors are working hard to ensure the success of
the program, and that beneficiaries are well served by a
program that gives them a wide range of choices.
Thank you for the opportunity to testify. I look forward to
answering any of your questions.
Chairman JOHNSON OF CONNECTICUT. Thank you very much.
[The prepared statement of Mr. Schiesser follows:]
Prepared Statement of Heath Schiesser, President, Prescription Drug
Plan, WellCare Health Plans, Inc., Tampa, Florida
I. INTRODUCTION
Good afternoon, Madam Chairwoman and Members of the Subcommittee. I
am Heath Schiesser, President of Prescription Drug Plans for WellCare
Health Plans. For over 10 years, WellCare has been serving Medicare
beneficiaries through health plans that offer high quality,
comprehensive, affordable coverage. More recently, as participants in
the new Medicare Part D prescription drug program, we have launched
three new stand-alone Medicare prescription drug plans providing
coverage that became effective on January 1, 2006. We consider it a
great privilege to be able to serve Medicare beneficiaries throughout
the nation.
We appreciate this opportunity to testify about implementation of
the Medicare Part D program. According to the most recent data released
by the Centers for Medicare & Medicaid Services (CMS), approximately
850,000 Medicare beneficiaries have enrolled in Part D prescription
drug plans offered by WellCare in all 50 states. Another 70,000
beneficiaries receive prescription drug coverage through WellCare's
Medicare Advantage health plans.
WellCare is strongly committed to meeting the health care needs of
Medicare beneficiaries and we are excited about our participation in
the new Part D program. This program, along with other provisions of
the Medicare Modernization Act of 2003 (MMA), is providing important
benefits and peace of mind to millions of Medicare beneficiaries. We
applaud Congress for enacting this landmark legislation, and we thank
CMS for its tremendous work in achieving a largely successful
implementation of the Part D program within a relatively short period
of time.
In our testimony today, we will focus on: (1) the savings and value
the Part D program is delivering to both beneficiaries and taxpayers;
(2) the critically important role that competition based on benefit
design has played in the program's success; (3) the experiences of
beneficiaries who have enrolled in WellCare's Part D plans; and (4)
specific steps WellCare and other plan sponsors are taking, in
collaboration with CMS and other partners, to strengthen the program.
II. PART D IS PROVIDING VALUE TO BENEFICIARIES AND TAXPAYERS
WellCare and other Part D sponsors are delivering more
comprehensive benefits at a lower cost than the experts had predicted
before plans developed their benefit packages for 2006. This outcome is
largely a result of the fact that plans have developed a number of
tools and techniques that have proven to be highly effective in making
prescription drugs more affordable for consumers. This positive outcome
is also a result of the success of the MMA legislation in creating
strong and vibrant competition among health plans which has led to
lower costs and better benefits for Medicare beneficiaries.
WellCare is giving beneficiaries the option of choosing
prescription drug coverage that goes well beyond the minimum
requirements established by the MMA. WellCare offers three PDP
alternatives across the nation. All three plans offer $0 generic drugs
without any co-pay, no deductible, and low premiums starting as low as
$17.13 in New York and averaging $22 across all our members. (Of
course, our full-dual and low income subsidy members have their
premiums paid entirely by Medicare.)
WellCare also offers Medicare Advantage plans with Part D drug
coverage in 53 counties that are home to more than 5.2 million Medicare
beneficiaries. In all of these counties, WellCare offers plans that
provide Part D coverage, plus lower physician and hospital co-pays, for
no monthly plan premium--including no Part D plan premium. Furthermore,
in 40 of those counties, 4.4 million beneficiaries have access to a
WellCare plan with no monthly plan premium and $0 generics in the
coverage gap.
Much like WellCare, a wide range of plans across the nation are
offering coverage that exceeds expectations. Many plans--including
WellCare's Medicare Advantage plans--are providing additional benefits
in the MMA-established ``coverage gap'' that begins after a
beneficiary's annual drug expenditures exceed $2,250. Under the MMA,
the standard benefit includes a coverage gap in which beneficiaries
would pay 100 percent of their total drug costs exceeding $2,250 until
their out-of-pocket expenditures reach $3,600. However, in all 50
states, beneficiaries have the option of choosing a Part D plan that
covers a portion of the costs in this coverage gap.
The value offered by Part D plans also can be seen in the lower-
than-expected premiums that beneficiaries are paying. Before plans
submitted their benefit packages for 2006, beneficiary premiums were
projected to average $37 a month. However, according to CMS, the
average premium for all prescription drug plans nationwide is actually
$30 a month--almost 20 percent lower than originally expected--with a
number of plans offering premiums that are far lower.
In addition, many plans have deductibles below the $250 maximum
standard, including 58 percent of all stand-alone prescription drug
plans that offer zero deductibles.\1\ According to CMS,\2\ 69 percent
of beneficiaries in stand-alone prescription drug plans and 89 percent
of beneficiaries in MA-PD plans have selected options offering zero
deductibles.
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\1\ AHIP analysis of CMS data, November 2005.
\2\ CMS, Presentation by Abby Block, Director of Centers for
Beneficiary Choices, April 5, 2006.
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Savings Generated by Competition
Overall, HHS has reported \3\ that beneficiaries who previously did
not have drug coverage are now saving an average of $1,100 on their
annual prescription drug costs by enrolling in the Part D program.
Moreover, a recent CMS analysis \4\ found that beneficiaries who select
the lowest-cost plan in their area can save up to 71 percent relative
to the amount they would pay without prescription drug coverage.
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\3\ HHS, Secretary's Progress Report II on the Medicare
Prescription Drug Benefit, February 22, 2006.
\4\ CMS Office of Policy, Analysis of Savings Available Under
Medicare Prescription Drug Plans, March 1, 2006.
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While all types of beneficiaries can save money by choosing Part D
plans, financially vulnerable beneficiaries can expect to receive
exceptionally large savings because of the low-income subsidies the MMA
provides. On average, Medicare will pay more than 95 percent of
prescription drug costs for these low-income beneficiaries.
The savings available to low-income beneficiaries are measured by
an August 2005 study, performed by PricewaterhouseCoopers,\5\ which
concluded that beneficiaries with incomes at or below 150 percent of
the federal poverty level and who are not on Medicaid can expect to see
their annual out-of-pocket prescription costs drop from an average of
$1,657 to $180 by participating in the new drug program. Another more
recent study, conducted by the Lewin Group,\6\ found that beneficiaries
without previous drug coverage who have one or more of five chronic
conditions--arthritis, diabetes, hypertension, osteoporosis, or
respiratory illness--can save 58 percent on their drug costs by
enrolling in a Part D plan.
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\5\ PricewaterhouseCoopers, Medicare Tomorrow: Future Savings for
Beneficiaries, August 25, 2005.
\6\ The Lewin Group, Chronic Health Conditions & the New Medicare
Part D Benefit: Savings on Frequently Used Medications, April 12, 2006.
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According to CMS data, the number of beneficiaries who are choosing
this new benefit and receiving these savings is increasing by more than
400,000 with each passing week. The agency recently announced that, as
of April 18, almost 20 million Medicare beneficiaries were receiving
prescription drug coverage through either stand-alone Part D
prescription drug plans or Medicare Advantage health plans. Another 6.8
million beneficiaries are benefiting from Part D subsidies that are
partially supporting their retiree health benefits. Overall, the total
number of Medicare beneficiaries with prescription drug coverage now
exceeds 30 million.
Taxpayers also are benefiting from plans' success in delivering
quality prescription drug coverage at an affordable price. HHS has
announced \7\ that the savings generated by competition in the Part D
program are greater than expected and are reducing costs for Medicare.
Since July 2005, the projected cost of the Part D program for 2006 has
declined by $7.6 billion. Similarly, projected program costs for the
next five years have declined by $30 billion according to HHS' most
recent estimates. These lower-than-expected costs mean that taxpayers
are receiving high value for the dollars they invest in the Part D
program.
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\7\ HHS, Secretary's Progress Report II on the Medicare
Prescription Drug Benefit, February 22, 2006.
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Sustaining These Benefits
Our experience at WellCare suggests that benefit design matters. We
have seen strong enrollment in our plans precisely because we have
developed plans that are meeting beneficiary needs. While some suggest
that standardization of benefits would simplify the program, proponents
of this approach are overlooking the reality that innovation will
continue to flourish as long as plans are competing based on their
ability to design benefits that are appealing to beneficiaries. This
element of competition is critically important in sustaining the high
quality, comprehensive, affordable options that beneficiaries are
seeing in this first year of the Part D program.
A review of the program indicates that plans are offering different
benefit packages, allowing beneficiaries to choose options that better
meet their needs with coverage that goes far beyond the minimum
requirements. It would be a serious mistake for Congress to undermine
these choices by requiring plans to adhere to rigid standardization
requirements. Allowing the market to produce high quality choices
through healthy competition is a much more effective way to meet
beneficiaries' needs than mandating one-size-fits-all benefits
packages.
The vast majority of beneficiaries have responded to these choices
by selecting benefit packages that differ from the minimum requirements
set by the MMA. CMS data \8\ show that the standard defined benefit has
been selected by only 16 percent of beneficiaries in stand-alone
prescription drug plans and by only 5 percent of beneficiaries in
Medicare Advantage plans with prescription drug benefits (MA-PD plans).
All other beneficiaries are choosing plans that offer enhanced benefits
or alternatives to the standard benefit.
---------------------------------------------------------------------------
\8\ CMS, Presentation by Abby Block, Director of Centers for
Beneficiary Choices, April 5, 2006.
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The value of choice has been demonstrated by WellCare for years in
our Medicare Advantage business. For example, in Broward County,
Florida (the Fort Lauderdale area), we offer three plans: Choice, Value
and Dividend, each of which have attracted a large number of members.
All three plans offer Part D coverage with $0 generics and no
deductible. They also offer reliable co-pays rather than co-insurance,
and lower physician and hospital costs for Medicare beneficiaries.
The Choice product offers co-pays of $0, $10 and $50
for primary care physician (PCP) office visits, specialist
office visits, and per-day hospital charges for the first five
days in the hospital. Choice also offers $0 generics in the
coverage gap.
By comparison, our Value product offers $0 co-pays
for PCP office visits, specialists and hospital stays, but does
not provide coverage in the coverage gap.
Finally, the Dividend product has higher co-pays of
$0, $15 and $50 with no coverage in the coverage gap, but
refunds $87.70 per month towards the member's Medicare Part B
premium.
To summarize, these three products offer beneficiaries the choice
of coverage in the gap, $0 co-pays, or over $1,000 a year toward Part B
premiums. These are meaningful differences that recognize the fact that
beneficiaries want a range of options to meet their particular needs
and circumstances.
There is another advantage to having plans compete based on benefit
designs. This approach creates incentives for innovation and makes the
marketplace competitive. Just look at WellCare's success in signing up
people into its PDP programs. We did not do it with a big, nationally
recognized brand name like AARP or Blue Cross. Despite being well known
and respected in many of our markets, WellCare is virtually unknown in
most of the country. Nor can our success be attributed to an expensive
advertising campaign. Rather, I believe WellCare attracted members by
providing a distinctive benefit package with $0 generics and no
deductible. And as long as there is flexibility in creating different
benefit packages, there will continue to be vibrant efforts to better
understand and meet the needs of Medicare beneficiaries.
Tools and Techniques for Increasing Value
WellCare is able to offer high quality, affordable coverage through
the Part D program because we have developed tools and techniques to
reduce out-of-pocket costs for beneficiaries and, at the same time,
improve quality by reducing medication errors and promoting clinically
sound drug use.
Drug Interactions: Before Part D, if a Medicare beneficiary
purchased drugs at more than one retail location, or perhaps via the
mail, no one entity had a complete picture of all the drugs that he or
she was taking. Now, through their pharmacy benefit manager, plans are
able to review all the drugs that an individual is taking and identify
potentially dangerous interactions before the drug is dispensed to the
member. Likewise, plans are also able to monitor dosages and frequently
abused drugs, like narcotics, and assure that they are treated
appropriately.
Screening for Excessive or Sub-Therapeutic Dosages: In some
instances, we have received requests for up to 900 tablets of a drug
whose normal 30-day supply is only 30 or 60 tablets. Recognizing the
potential for abuse, we typically will contact the prescribing
physician to determine if the prescription is appropriate. Another
circumstance in which we may take similar action is when we receive
requests for low dosages of a schizophrenia drug that is sometimes used
off label as a sleeping aid--a usage that could have a detrimental
effect on a patient's health.
Encouraging Generic Drug Use: One of the most important steps
Medicare beneficiaries can take to minimize their drug costs, and in
many cases avoid the coverage gap, is to utilize generic drugs, which
cost on average less than 20 percent of their brand counterparts. We
encourage this by designing products with $0 generic drug co-pays and
by adopting system edits that substitute generic drugs for more
expensive brand name drugs. In addition to helping WellCare keep plan
premiums low, this approach minimizes the cost to the beneficiary and
makes the most of the coverage that Medicare Part D provides.
Interestingly, over 80 percent of the most prescribed brand drugs have
a generic therapeutic alternative available. Of course, if the member's
physician has particular concerns that make the generic an unacceptable
alternative, then the member can continue to take the more expensive
brand name drug.
Discounts: Another way WellCare helps beneficiaries avoid the
coverage gap, or help them minimize costs if they do reach the coverage
gap, is by negotiating attractive discounts with retail pharmacies. For
example, WellCare has negotiated prices that are more than 15 percent
below typical cash prices. This clearly helps beneficiaries make the
most of the Part D benefit.
I recognize that there has been some concern about the effect of
Part D on independent pharmacies. A few facts to clear the air. First,
of the 52,000 pharmacies in our network, approximately 16,000 are
independent and are valuable partners in serving our members. They are
an important part of our nation's system for delivering drugs to
members. Second, our payments to independent pharmacies are, on
average, about 1-3% higher than our payments to chain pharmacies.
Third, our payments to independent pharmacies are timely; we receive
bundled claims from our pharmacy benefit manager twice a month and we
typically pay these claims, by electronic wire transfer, within 3 to 5
days after receiving them.
Formularies: Formularies, which also play an important role in
controlling costs, must comply with stringent standards which ensure
that they include drugs necessary to treat all major diseases. Medical
professionals play a central role in developing formularies. To ensure
that formulary decisions are clinically appropriate, health plan
Pharmacy & Therapeutics Committees--comprised principally of physicians
and pharmacists--identify drugs for inclusion on health plan
formularies based on documented safety, efficacy, and therapeutic
benefit.
A number of studies demonstrate that these strategies are highly
effective in making prescription drugs more affordable for consumers.
For example:
The Congressional Budget Office (CBO) has estimated
\9\ that private sector management techniques employed by
Medicare Part D plans would save individuals 20-25 percent off
retail prices for prescription drugs.
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\9\ CBO, A Detailed Description of CBO's Cost Estimate for the
Medicare Prescription Drug Benefit, July 2004.
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A 2003 study,\10\ conducted by Associates and Wilson
on behalf of America's Health Insurance Plans (AHIP), found
that the PACE program in Pennsylvania--the largest state
pharmacy assistance program in the nation--could save up to 40
percent by adopting the full range of private sector pharmacy
benefit management techniques.
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\10\ Associates & Wilson, Prescription Drug Benefit Management:
Improving Quality, Promoting Better Access and Reducing Cost, October
2003.
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In addition, the Government Accountability Office
(GAO) has reported \11\ that pharmacy benefit management
techniques used by health plans in the Federal Employees Health
Benefits Program (FEHBP) resulted in savings of 18 percent for
brand-name drugs and 47 percent for generic drugs, compared to
the average cash price customers would pay at retail
pharmacies.
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\11\ Government Accountability Office, Federal Employees' Health
Benefits: Effects of Using Pharmacy Benefits Managers on Health Plans,
Enrollees, and Pharmacies (GAO-03-196), January 2003.
These findings clearly demonstrate that the private sector has a
strong track record of using its experience and capabilities to deliver
affordable prescription drug benefits. At a time when federal resources
are severely strained, it is important for policymakers to recognize
the ability of health insurance plans to implement strategies that are
enabling Medicare beneficiaries to receive the greatest possible value
for the dollars the Medicare program is spending on their prescription
drug coverage.
III. Beneficiary Experiences and Attitudes
To more clearly illustrate the value the Part D program is
delivering to Medicare beneficiaries, I would like to review the
personal experiences of two seniors who are enrolled in WellCare's
prescription drug plans. These real world examples demonstrate that
beneficiaries are achieving significant savings on their prescription
drugs by choosing Part D plans.
``Mike'' is a Medicare beneficiary in California who will probably
save about $2,400 this year as a member of a WellCare plan. He is
taking six prescriptions that would cost about $520 per month at
retail. By comparison, with WellCare's pharmacy discounts and the
coverage provided by Medicare Part D, he will save about 38 percent
this year.
``Ann'' is a Medicare beneficiary in New Hampshire who will
probably save about $700 this year and avoid the coverage gap as a
member of WellCare's Signature plan. She is taking Nexium and Clarinex,
which average about $240 per month combined at retail prices, or about
$2,500 over the course of the year with our discounts. At that rate,
she would reach the coverage gap in about November and spend about $250
in the coverage gap. By switching to generic alternatives, her monthly
total drug cost will drop to about $70 per month, which will allow her
to avoid the coverage gap entirely. Even better, since the WellCare
Signature plan has $0 generic co-pays, her monthly co-pays for those
two drugs will be zero. As a result, Ann's monthly premium for her Part
D plan will be her only expense on prescription drugs for the entire
year.
While these examples provide just a brief glimpse at the success of
the Part D program, the experiences of these Medicare beneficiaries are
not uncommon. Numerous surveys show that a large percentage of the
overall Medicare population is pleased with the new program and the
benefits it is delivering.
In early March, Ayres, McHenry & Associates conducted two surveys
to evaluate the attitudes of beneficiaries who already were covered by
Part D plans. One survey \12\ focused on beneficiaries who chose plans
on their own and the other focused on dual eligibles who were
automatically enrolled in the program. Among seniors who voluntarily
signed up for the program, 59 percent said they already were saving
money and more than 80 percent reported that they had no problems
related to enrollment or usage of their new benefits. Additionally, 65
percent of enrolled seniors said they would recommend that other
seniors sign up for the program, versus 8 percent who said they would
not.
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\12\ AHIP, Most Medicare Drug Enrollees Already Saving, March 13,
2006.
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The other survey \13\ found that among seniors who are dually
eligible for both Medicare and Medicaid, 90 percent said they had
experienced no problems using the new Medicare drug benefit. Another 4
percent said they had a problem that was resolved, while 4 percent said
they had a problem that was not yet resolved.
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\13\ AHIP, Ninety Percent of Low-Income Seniors Surveyed Say No
Problems Using Medicare Drug Benefit, March 13, 2006.
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In recent weeks, these findings have been reinforced by numerous
other surveys indicating that beneficiaries are well-served by the Part
D program. These survey findings clearly indicate that a large majority
of Part D enrollees already are saving money, have not had problems
signing up for or using their new benefits, and would recommend the
program to others.
IV. PLANS ARE WORKING TO FURTHER STRENGTHEN THE PROGRAM
WellCare has been preparing for implementation of the Part D
program for more than two years.
We are proud to be a partner with CMS in working to ensure that the
program is meeting beneficiary needs and continues to be strengthened
on an ongoing basis.
At every step of the implementation process, WellCare has provided
leadership and offered input to CMS on measures needed to promote a
smooth transition for beneficiaries. We have significantly expanded our
customer service systems, we have reached out to pharmacists, and we
have adopted transition policies to ensure that enrollees in our
plans--including dual eligibles and low-income seniors--receive their
medications on a timely basis.
Improvements to Customer Call Centers
In January, WellCare's call centers--like other PDPs across the
nation--experienced extremely high call volumes. These call volumes
were related to problems with eligibility data and operational
difficulties in the pharmacies. Since our staffing models did not
anticipate these problems and the calls they would create, we were not
adequately staffed to absorb these additional calls. As a result, the
performance of our call centers initially did not meet the high
standards we set for ourselves. Most other plans had similar
experiences. Therefore, we moved quickly in early January to adopt
corrective measures, dramatically increasing our staff, working
overtime, and refining our processes. Between January and April, we
increased our staffing by approximately 75 percent.
Call volumes have moderated significantly as most of the
eligibility and operational challenges have been resolved in the
intervening months. Now, WellCare is consistently delivering service
levels in excess of CMS requirements. In the month of April, WellCare
answered 90 percent of our member calls and 87 percent of our
pharmacist calls within 30 seconds. In March, those figures were 91
percent and 93 percent, respectively. Our average time to answer has
been under 20 seconds over the last two months.
CMS has attempted to measure the performance of WellCare and other
companies' call centers through an outside contractor. Unfortunately,
this contractor's methodology appears to be flawed and is yielding
results that are dramatically inconsistent with our data. We are
working closely with CMS to urge improvements in the contractor's
methodology. In the meantime, I am confident that the contractor's
results, based on fewer than 80 calls per week, are less reliable than
our data which is based on the thousands of calls we receive every
week.
Transition to Formularies
To ensure continuity of care during the initial implementation of
the program, WellCare and other plan sponsors adopted transition plans
in January to ensure that beneficiaries continued to receive an initial
prescription for covered Part D drugs they had been taking that
otherwise would have been subject to formulary rules. CMS subsequently
required all plans to extend these transition policies through a 90-day
period that ended on March 31.
As we approached the end of this transition period, WellCare took a
number of steps to ensure a smooth shift into the normal application of
our formulary. First, we pro-actively communicated with members,
pharmacists, and in some cases physicians to alert them to the fact
that the transition would be ending soon and, additionally, to
encourage a switch to formulary drugs. Second, we are phasing out the
transition over several months to moderate the effect on members,
providers and our own call centers. We have further increased our staff
to be prepared to handle the requests for exceptions to our formularies
in a timely manner. So far, we have succeeded in saving millions of
dollars for members and taxpayers through the phasing in of our
formularies, while at the same time maintaining call center times above
CMS standards and continuing to respond to requests for exceptions to
our formulary within 24 hours (versus the 72 hours required by CMS).
Simplifying the Exceptions Process
On April 11, AHIP and the American Medical Association (AMA)
announced a standard form to simplify the process by which physicians
can request prior authorization and coverage of non-formulary drugs
under the Part D program. This standard form was developed through the
collaborative efforts of plan sponsors, an AMA work group, and several
beneficiary advocates. CMS is expecting Part D plans to implement the
standard form as a ``best practice'' as soon as possible and will
require its adoption in the near future. Meanwhile, AHIP members are
continuing to work with the AMA and other partners on auxiliary forms
that can be used for specialized drugs that require more information.
In addition to AHIP members and the AMA, other organizations
involved in this collaboration include the American Psychiatric
Association, the American Academy of Family Physicians, the American
College of Physicians, the Medical Group Management Association, the
National Council on the Aging, the Center for Medicare Advocacy, the
Alzheimer's Association, the American Pharmacists Association, and the
American Society of Consultant Pharmacists.
The agreement on this standard form is an important step toward
ensuring that physicians know how to help beneficiaries obtain their
medications on a timely basis. It also clearly demonstrates our
industry's strong commitment to simplifying administrative procedures
and improving uniformity wherever possible.
Standardizing Messages for Pharmacists
On April 18, AHIP joined the National Association of Chain Drug
Stores (NACDS) and the National Community Pharmacists' Association
(NCPA) in announcing a joint agreement on standardized electronic
messaging that will promote the consistent use of key terms by Part D
plans to assist pharmacists in better serving beneficiaries. The
standardized electronic messages were developed to help pharmacists
quickly determine the appropriate course of action for filling
beneficiaries' prescriptions under four different circumstances: (1)
when a particular drug is not covered; (2) when prior authorization is
required; (3) when plan quantity or other coverage limitations have
been exceeded; and (4) when the pharmacy is not part of the Part D
plan's network.
AHIP, the NACDS, and the NCPA have asked the National Council for
Prescription Drug Programs (NCPDP) to endorse these messages at its
upcoming meeting in May. The NCPDP previously adopted our
recommendation to develop new codes for notifying pharmacists in clear,
understandable terms when drugs are statutorily excluded from Part D
basic benefits or are covered under Part B.
This agreement on standardized messaging is strengthening the
program by helping to eliminate a possible source of confusion for
pharmacists, thus allowing them to provide more prompt and effective
service to beneficiaries.
Ensuring Continuity of Care
WellCare and other plan sponsors also have taken steps to balance
the goals of: (1) ensuring continuity of prescription drug coverage for
beneficiaries; and (2) using formulary management techniques to
maximize the quality and cost-effectiveness of the Part D drug benefit.
On April 27, AHIP's Board of Directors issued a statement (see Appendix
A) indicating support for the principle of providing continuity of care
for beneficiaries enrolled in the Medicare Part D prescription drug
program. This statement supports recent efforts by CMS--announced by
the agency in an April 26 guidance document--to ensure that Medicare
beneficiaries who have been prescribed a medication on a Part D
formulary will not be required to change their medication or pay
increased copays or coinsurance throughout a contract year.
In addition to supporting continuity of care when formulary changes
are made, the AHIP Board statement discusses the importance of
providing Medicare beneficiaries with a prescription drug benefit that
reflects the latest scientific evidence regarding the efficacy of
various medication therapies, side effects and adverse reactions,
interactions among medications, and disease-specific concerns. The
statement identifies two circumstances under which formulary changes
for existing enrollees are justified to protect the health of
beneficiaries or enable them to receive greater value: (1) when safety
or efficacy concerns have been identified by the Food and Drug
Administration and/or the plan's Pharmacy and Therapeutics Committee
based upon scientific evidence; or (2) when an FDA-approved generic
alternative to a brand name drug becomes available.
AHIP's Board statement gives beneficiaries the peace of mind of
knowing that they will be able to continue to receive their Part D
formulary drugs throughout the year. At the same time, it preserves
flexibility for plan formularies to maximize the value of the drug
benefit when safety concerns are raised or generic equivalents come to
market.
V. CONCLUSION
Thank you again for this opportunity to testify about our
perspectives on these important issues. Please be assured that WellCare
remains deeply committed to the long-term success of the Medicare Part
D prescription drug program. We appreciate the support many Members of
the Subcommittee have demonstrated for this valuable program and for a
strong public-private partnership in Medicare. We look forward to
continuing to work with you to meet future challenges in Medicare and
throughout the U.S. health care system.
__________
Appendix A
Statement by the Board of Directors, America's Health Insurance
Plans on Maximizing Quality and Affordability of Prescription Drug
Coverage for Medicare Beneficiaries
April 27, 2006
INTRODUCTION
Formularies and other pharmacy benefit management strategies allow
Part D plans to control costs while ensuring the quality and safety of
prescribed drugs for Medicare beneficiaries. These tools have kept Part
D premiums affordable for beneficiaries and reduced costs to the
Federal Government. Beneficiaries, who were initially expected to pay
$38 per month in Part D premiums, are paying an average of $25. This is
a savings of nearly one-third of the predicted premium amount, and the
projected cost of the program to the Federal Government has been
reduced by $7.6 billion in 2006 and $30 billion over the next five
years. For this success to continue, Part D plans need to rely on the
proven best practices in pharmacy benefit management that are already
providing Medicare beneficiaries with affordable, high-quality
prescription drug benefits.
The formulary is a list of drugs that have been reviewed for safety
and efficacy and are approved for coverage by the plan. Such drugs
commonly are categorized into several ``tiers,'' with cost-sharing for
the drug determined by the tier to which it is assigned. Formularies
play an integral role in ensuring beneficiaries have cost-effective
access to clinically appropriate drugs. Part D plans have Pharmacy and
Therapeutics (P&T) Committees, primarily composed of physicians and
pharmacists that make decisions about which drugs to include on
formularies based upon a clinical review of the scientific evidence.
Formularies promote affordability by encouraging competition among
pharmaceutical manufacturers. Once the P&T Committee determines there
are multiple drug products with similar therapeutic value, they
consider cost effectiveness to ensure that beneficiaries receive the
greatest value from their prescription drug benefit.
The Centers for Medicare & Medicaid Services (CMS) evaluates and
approves all Medicare Part D formularies to ensure they are
comprehensive in accordance with CMS standards. CMS has established
clear procedures under which beneficiaries and their physicians can
request coverage of prescription drugs that are not on a plan's
formulary. This process establishes strict timeframes and includes an
opportunity to appeal to external reviewers who have no affiliation
with the plan.
ENSURING CONTINUITY FOR BENEFICIARIES
In addition to premiums and out-of-pocket costs, the drugs included
on a Part D plan's formulary and the tier structure are important
factors that Medicare beneficiaries evaluate when determining which
Part D plan best meets their specific needs and circumstances.
Appropriate formulary management improves clinical benefits and
reduces costs for Medicare beneficiaries. The prescription drug arena
is continuously evolving, with new scientific evidence emerging almost
daily regarding the efficacy of various medication therapies, side
effects and adverse reactions of both newer and older medications,
interactions among medications, and disease specific concerns. With
that in mind, Plan sponsors may need to make formulary changes during
the year to provide Medicare beneficiaries with a prescription drug
benefit that reflects the latest in scientific evidence.
At the same time, AHIP members strongly support maintaining
continuity of care if a formulary change is made. Accordingly, we will
support CMS' efforts to ensure that Medicare beneficiaries who have
been prescribed a covered Part D formulary medication will not be
required to change their medication or pay increased copayments or
coinsurances throughout a contract year except when:
Safety or efficacy concerns have been identified by
the Food and Drug Administration and/or the plan's Pharmacy and
Therapeutics (P&T) Committee based upon scientific evidence; or
An FDA approved generic alternative to a brand name
drug becomes available.
In these two circumstances, changes for existing enrollees are
justified to protect the health of beneficiaries or enable them to
receive greater value for the dollars they spend on prescription drugs
while ensuring quality. Changes would only be made following
appropriate notice as specified by CMS.
Chairman JOHNSON OF CONNECTICUT. Mr. Hays.
STATEMENT OF ROBERT M. HAYES, PRESIDENT, MEDICARE RIGHTS CENTER
Mr. HAYS. Good afternoon, Madam Chairman, Mr. Stark, Mr.
Doggett. We do very much appreciate the opportunity to share
with you our experiences and our clients' experiences during
the first 4 months of the Medicare Part D implementation.
As you may know from national and State hotlines, casework,
education programs, we provide direct assistance to people with
Medicare. Each year the Medicare Rights Center receives over
80,000 calls for assistance. In recent months we have
particularly concentrated our services on enrolling people with
Medicare in low-income programs, especially Extra Help.
We have also launched a Part D appeals program. We have
recruited a battery of lawyers, volunteer lawyers and
physicians, to assist people with Medicare, obtain the
medications that plans have denied them.
The Medicare Rights Center is a nonprofit, independent
organization relying on a small staff with hundreds of deeply
committed volunteers. We are not supported by the
pharmaceutical industry, the insurance industry, or any other
special interest group. We have no political or commercial
interest that interferes with our effort to propose public
policies to serve people with Medicare.
That being said, Madam Chairman, at the Medicare Rights
Center we are experiencing Part D to be badly designed, a
scandalously wasteful program that provides far too little drug
assistance, health security and peace of mind to people with
Medicare.
Now, this does not mean that people with genuine need
cannot and do not get meaningful assistance. We work to bring
that help to people every day. We do not dispute the polls that
say up to two out of three people enrolled in a plan are
actually saving some money, but in a $1.3 trillion program, we
ask about the millions of people in need who are not seeing
savings.
Our clients continue to report problems. Many find that
their drugs are not covered by their plan, that they cannot
afford their copayments, that they lost better coverage.
I will just mention very quickly some of the aid-specific
correctives we are recommending in our written testimony.
Number one, first and foremost, Madam Chairman, we should
automatically enroll eligible people in the low-income subsidy.
There is widespread--there has been widespread bipartisan
agreement that the number one priority of a Medicare drug
benefit is to assist the poorest Americans, secure the
medicines that doctors prescribe.
Our key work over the past 6 months has been to enroll as
many people as we could in Extra Help. We have enlisted
hundreds of volunteers to reach out. We advertise a toll-free
phone number, run public service announcements, work
cooperatively with drug plans. We work with pharmaceutical
companies that supply us with contact information for poor
people who have been disqualified from pharmaceutical
assistance programs because of Part D. Ironically these people
are good candidates for Extra Help.
Still the results are dismal. It takes 33 calls to identify
a likely candidate for Extra Help; 80 percent of eligible
people, Madam Chairman, have not yet been enrolled. These are
the folks who need our help the most. We all admire the
tenacity of Sisyphus futilely pushing his boulder up the hill,
but that should not be our model in a public program aimed at
protecting the lives of millions of Americans.
Federal financial data on income and income-generating
assets can be used to automatically enroll men and women
eligible for Extra Help. Automatic enrollment with opt out
works very well in Medicare Part D, which has a 96 percent
enrollment rate. It can work for part D's Extra Help as well.
Another recommendation, let us require meaningful Part D
plan comparisons. Reasonable public policy should not require
people with Medicare to shoot in the dark to pick a plan that
will work for them. Thoughtful choices is not what has been
going on over the past 3 or 4 months. Many callers now to a
hotline, who are enrolled in plans, never understood that a
covered drug could come with $100 per prescription copayment.
They never thought a covered drug would come with requirements
that they try other medications first, or that their doctor
would have to agree to become a witness in a legal appeal so
they could get their covered drug.
Almost no one now hitting the gap in coverage, this
infamous doughnut hole, was told about this by the plans. How
many brokers, people earning commissions for each enrollment,
each person they sign up, how many brokers do you think told
their customers about the doughnut hole? Congress should force
a more finite number of plans into meaningful comparisons to
allow customers, however imperfectly, to make a less risky
selection.
Look, even with these reforms, there still will be too much
waste, not enough help to provide a benefit as good as we can
afford with finite dollars. The lessons of Part D cry out for
enactment of a drug benefit administered directly by Medicare.
Let the plans compete with a Medicare drug benefit, increase
choice, and look to keep administrative costs low and
profiteering nonexistent. Honest supporters of a market
approach should not fear competition, not even for Medicare.
Thank you.
[The prepared statement of Mr. Hayes follows:]
Prepared Statement of Robert M. Hayes, President, Medicare Rights
Center
Good afternoon, Madam Chairman, Mr. Stark and Members of the
Committee. We appreciate the opportunity to share with you our day-to-
day experiences assisting people with Medicare obtain good health care.
Today, we will report on the gratifying but often heart-breaking work
we do with our clients as they struggle to navigate the Medicare Part D
prescription drug program.
The Medicare Rights Center (MRC) is the largest independent source
of Medicare information and assistance in the United States. Founded in
1989, MRC helps older adults and people with disabilities obtain good
affordable health care. Every day we assist people with Medicare as
they navigate the health care system, enroll in programs that can help
them pay for health care, and overcome barriers to needed care.
The Medicare Rights Center is a not-for-profit consumer service
organization, with offices in New York, Washington and Baltimore. It is
supported by foundation grants, individual donations and contracts with
both the public and private sectors. We are consumer driven and
independent, relying on a small staff and hundreds of deeply committed
volunteers to carry out our mission. We are not supported by the
pharmaceutical industry, insurance companies or any other special
interest group. Our non-partisan mission is to serve the 43 million men
and women with Medicare.
Through national and state telephone hotlines, casework and
professional and public education programs, MRC provides direct
assistance to people with Medicare from coast to coast. Each year, the
Medicare Rights Center receives over 80,000 calls for assistance from
people with Medicare. Our counselors are trained to assist consumers
with complex problems and we complement the basic services offered by
the 1-800-MEDICARE hotline operated by the Centers for Medicare and
Medicaid Services (CMS). Indeed, 1-800-MEDICARE is the largest source
of referrals to our hotline; MRC receives no CMS support for its
consumer hotline.
MRC also brings to professional counselors, care givers and
consumers across the country Medicare Interactive, a web-based
counseling tool--developed with major foundation support and with a
seed technology grant from the United States Department of Commerce.
Medicare Interactive assists people with Medicare access benefits,
including Part D.
We also reach out into low income, minority communities and, in
recent months, have concentrated our services on enrolling people with
Medicare in low income programs--the Part D Extra Help Program and
Medicare Savings Programs, especially QI-1.
We have launched a Part D appeals program, recruiting a battery of
volunteer lawyers and physicians to assist people with Medicare obtain
medications denied to them by their Part D plans. Drug plans place the
Medicare Rights Center's toll free phone number on notices informing
their enrollees that the Part D plan is denying coverage of a
prescribed medication. Since we receive no federal or state financial
support to assist people with these Part D appeals, we can only make a
dent in the great need for this assistance. The Committee should know
that without competent, independent representation, the Part D appeals
and exceptions process is, for most people with Medicare, a sham.
MRC gathers data on the health care needs of the men and women whom
we serve, and devises policy recommendations from those data. MRC is
committed to policy recommendations that are grounded in our work with
the people we serve. We have the freedom of having no political or
commercial interest that interferes with our efforts to propose
sensible, non-ideological public policies that serve the interest of
people with Medicare.
To that end, we reiterate our appreciation of this opportunity to
share with you our experiences, our clients' experiences and the
lessons learned from the first four months of the implementation of
Medicare Part D.
``Scandalously Wasteful Program''
We intend to avoid the formulaic debates that Part D typically
stimulates. As you may know, and as I will explain, we at the Medicare
Rights Center consider Part D to be a badly designed, scandalously
wasteful program that provides far too little drug assistance, health
security and peace of mind to older and disabled Americans. The
architects of Part D seem to have forgotten many of the lessons learned
on what makes Medicare a national treasure.
But this does not mean that people with genuine need cannot and do
not get meaningful assistance from the Part D drug benefit. We have no
reason to dispute polls that say up to two of three people enrolled in
a plan are saving at least some money. But in a $1.3 trillion program,
we must ask about the millions of people in need who do not see
savings.
We have no reason to dispute, as the HMO lobby reported, that
nearly 90 percent of the impoverished Americans switched from Medicaid
drug coverage to Medicare drug coverage were not wrongly denied needed
medication during the transition. But what about the ten percent, the
600,000 men and women--some small percentage of whom swamped our
hotlines--that were?
People who have managed to enroll in the low income subsidy or
Extra Help Program are certainly well served by Part D--so long as they
find a plan that covers their drugs. But why have the diligent efforts
of the Social Security Administration and hundreds of community
organizations like MRC been able only to enroll less that 20 percent of
eligible Americans in the Extra Help Program?
It is good news that millions of additional people with Medicare
now have some drug coverage than had it in 2005. But millions do not
and millions more are worse off then before.
Our clients come to us in droves to report continuing problems.
Many find that their drugs are not covered by their plan, that they
cannot afford their co-payments, that they lost better coverage. We
believe that an objective appraisal of Part D would lead Congress to
redesign this program, starting off by allowing Medicare to offer a
drug benefit integrated into Part B that would be comprehensible and
reliable.
But allow me to start with eight correctives that would make the
existing drug program better able to meet its stated objectives.
AUTOMATICALLY ENROLL ELIGIBLE PEOPLE IN THE LOW INCOME SUBSIDY
[GRAPHIC] [TIFF OMITTED] T3132A.005
Since the beginning of the debate of the Medicare Modernization Act
of 2003 (MMA), there has been widespread, bi-partisan agreement that
the number one priority of a Medicare drug benefit is to assist the
poorest Americans secure the medication their doctors prescribe. The
low income subsidy, popularly called the Extra Help Program, offers the
promise of a comprehensive and affordable drug benefit--so long as the
patient selects a drug plan that works for her.
One of MRC's key priorities over the past six months has been to
enroll as many people in that benefit as humanly possible. With funding
from the Starr Foundation and Robin Hood Foundation, among others, we
have enlisted hundreds of volunteers to reach out to likely candidates
for Extra Help, explain the program to them and whenever possible
enroll people on line. We are probably as sophisticated as anyone in
conducting this work. We advertise a toll free phone number through
AARP, chain drug stores, senior centers and elsewhere. We have public
service announcements and look to work cooperatively with drug plans
(who gain enhanced payments when we sign up their enrollees in Extra
Help). We work with pharmaceutical companies that supply us with
contact information for people with low incomes who have been
disqualified from their patient assistance programs because of Part D:
they are good prospects for Extra Help eligibility. Still, the results
are dismal: it routinely takes 33 calls by MRC volunteers and staff to
identify a likely candidate for the Extra Help Program.
We can all admire the tenacity of Sisyphus futilely pushing his
boulder up the hill. But that does not mean that the Myth of Sisyphus
should be our model in designing a public program aimed at protecting
the lives and health of millions of older Americans. If we are sincere
about assisting poor Americans with Medicare have real access to a
comprehensive and affordable drug benefit, we know how to do it.
All people with Medicare whose financial data demonstrate
eligibility for the low income subsidy should be automatically enrolled
in the Extra Help Program. To simplify this, Congress should eliminate
the asset test. The Social Security Administration's own figures show
that the asset test disqualifies half those who apply for Extra Help.
Considerable research--and MRC's on-the-ground experience--shows that
the asset test discourages many people from even applying for
assistance. But with or without an asset test, federal financial data
on income and income generating assets can be used to automatically
enroll men and women eligible for the Extra Help Program. Automatic
enrollment, with opt-out, works well in Medicare Part B which has a 96
percent enrollment rate.
Congress: eliminate from the Extra Help Program these hoops that
many frail elders will not be able to negotiate. Automatic enrollment
could make real the promise of affordable medicine for many of the
poorest Americans with Medicare.
REQUIRE MEANINGFUL PART D PLAN COMPARISONS
Reasonable public policy would not require people with Medicare to
shoot in the dark to pick a drug plan that would work for them. We
appreciate efforts like that of Congressman Doggett's daughter, a
physician, to assist her grandmother select a drug plan. Secretary
Leavitt, according to published reports, made a similar if less
successful effort to assist his parents select a drug plan. But Las
Vegas-style gambling on one's health care is not what we should be
purchasing for our parents, our grandparents and ourselves.
Many callers to MRC's hotlines are among the more sophisticated of
consumers. They did what the President and others told them to do. They
found help with the internet, they found a plan that said it covered
the drugs they now are taking, they found a plan with premiums and
deductibles that seemed affordable, and they signed up.
Now they call us in a panic. They never understood that a ``covered
drug'' could come with a $100 per prescription co-payment. They never
thought that a ``covered drug'' would come with trapdoors--requirements
that they try other medications first, or that their doctor would have
to agree to become a witness in a legal appeal so they could get the
``covered drug.'' Almost no one now hitting the gap in coverage, the
infamous donut hole, was told about this by the plans. How many
brokers, people earning commissions for each person they enroll, do you
think told their customers about the donut hole?
[GRAPHIC] [TIFF OMITTED] T3132A.006
If a majority of the members of Congress continues to support this
marketplace experiment, two steps could help: one, Congress should
authorize a drug benefit integrated into Medicare to serve as a
reliable safe harbor, a genuine choice, for people dissatisfied with
the private plans; and two, Congress should force a more finite number
of plans into meaningful comparisons that will allow, however
imperfectly, some consumers to make a less risky selection.
END MARKETING ABUSES
MRC's experience with frantic callers to our hotline is leading us
to the unhappy conclusion that nearly all marketing of Part D plans is
misleading, nearly all of it exploitative of the neediest and frailest
older Americans. Worst off are people who were contacted by
telemarketers, a practice sanctioned by CMS. Caller after caller tell
us that they did not know much about the plan they had enrolled in, and
that they had been told things that were just not true. Other callers
tell us that they did not know that they had signed up for an HMO, not
a drug plan, until their doctor presented them with a bill and told
them he is out of the HMO's ``network.'' Increasingly, as people fall
into the gap in coverage, the infamous ``donut hole,'' they are
shocked. Why?
[GRAPHIC] [TIFF OMITTED] T3132A.007
The design of this privatized drug program creates a single
commercial incentive for the drug plans, the brokers they employ, and
the marketing firms they retain. The incentive: market share. Even
putting aside purposeful fraud by the unscrupulous, deception is an
inevitable by-product of this market created by the MMA and CMS.
Have you reviewed marketing material from the drug plans? Have you
heard sales pitches at free breakfast meetings? At senior centers? A
plan with a low deductible or a low premium will highlight that
feature. People will be sold low deductible plans without understanding
the other side: restricted formulary, rigid medication utilization
tools, excessive costs per prescription. How many members of Congress
have seen plan marketing materials--TV ads, brochures, radio spots--
talk about the gap in coverage? Even CMS is part of the problem. Late
last year CMS spent untold public dollars running an insert about Part
D in Parade Magazine. CMS, supposedly explaining the standard drug
benefit, neglected to even mention the donut hole. Shareholders are
protected by the Securities Exchange Commission and securities laws.
Aren't older Americans entitled to similar protections from the
predatory practices of the insurance industry? Deception comes in many
forms: omitting material information from drug plan advertising is one
that is epidemic in Part D.
Telemarketing of drug plans must be banned, and all marketing
materials must be limited to accurate and comprehensive comparisons of
standardized plans.
IMPROVE ACCESS TO MENTAL HEALTH DRUGS
Clients continue to flock to MRC seeking help with barriers drug
plans are putting in the way of access to antidepressants and
antipsychotics, drugs commonly needed by people with mental illnesses.
As you know, CMS required plans to cover ``all or substantially all''
of these medicines, along with drugs in four other critical therapeutic
classes. But that requirement is being undermined by other restrictions
imposed by plans--prior authorization, step therapy and quantity
limits. Quantity limits in particular are billed as ``safety edits,''
but drug plans (seeking, of course, to maximize profits) generally
impose them only on the most expensive drugs. Cost, not safety, is
motivating the plans.
[GRAPHIC] [TIFF OMITTED] T3132A.008
One important, and relatively inexpensive, class of drugs--
benzodiazepines--is excluded by law from Part D coverage. This
exclusion threatens the stability of the drug regimens of many people
with mental illness. Most state Medicaid programs continue to provide
coverage but many people with low incomes do not qualify for Medicaid,
and states are under financial pressure to cut back coverage. In
Florida, people who qualify for Medicaid through spend down are finding
it difficult to maintain access to these medicines.
Congress should end the exclusion of benzodiazepines from the Part
D benefit and ensure adequate coverage of mental health drugs, and
should enjoin plans from doing an end run around formulary requirements
with utilization management dodges.
ELIMINATE THE ``DONUT HOLE''
The donut hole, the gap in coverage that extends from about $2,250
to $5,100 in drug spending will disrupt treatment for needy men and
women with Medicare. Our clients are hitting it already, and estimates
suggest that some 7 to 10 million people with Medicare are at risk of
reaching the coverage gap. Even those enrolled in a plan will be forced
to choose between buying medicine, paying the monthly premiums they
still owe, and buying other necessities of life. Most impacted are
those who fail to qualify for the Extra Help Program, perhaps because a
life insurance policy or other savings they rely on for financial
security puts them over the limit.
[GRAPHIC] [TIFF OMITTED] T3132A.009
We understand that the donut hole resulted from the financial
constraints imposed on Congress by the White House when it was debating
the MMA in 2003. But the decision to hand the drug benefit over to
private insurers rather than have Medicare secure lower prices
precluded savings that could have been used to fill the coverage gap.
Studies show that, if Medicare secured the same prices that the
Veterans Administration or other industrialized countries pay, there
would be enough money to fill the donut hole. We appreciate that there
is much debate, some of it informed, about this assertion. Proof of
Medicare's effectiveness as a negotiator is found in the pharmaceutical
industry's virulent opposition to allowing Medicare to negotiate drug
prices.
We understand why PhARMA will fight this to the death. Why are a
majority of the members of Congress afraid to try it?
STANDARDIZE, STREAMLINE PART D EXCEPTIONS AND APPEALS
Parts A and B of Medicare have worked well because they are based
on the concept that individuals will have access to care deemed
medically necessary by their treating physician. In theory, drugs under
Part D are supposed to follow a comparable concept: while Part D
consists of a patchwork of plans with various options and limitations
on prescriptions, the MMA also includes exceptions and appeals
provisions intended to allow individuals to access medically necessary
drugs.
We now know from our first hand experience that the current system
fails to deliver on this bedrock concept--access to medications that
are medically necessary. Over the last several months MRC has helped
hundreds of men and women take on the Part D appeals system. Most of
our appellate clients had been denied access to medically necessary
medications, and almost all were stymied by the Part D appeals process.
Here are ways to improve this flawed, consumer hostile system:
standardize the appeals process and forms;
streamline the appeals process; and
provide resources for independent consumer
organizations to provide representation to people denied
medically necessary medicine.
The Part D appeals process is impossible for the average consumer
to navigate. Following near universal criticism, the recent move to
standardize the coverage determination request form is a welcome, but
very small start. Use of these forms by plans is voluntary, and they
are only the first step in a multi-step appeals process. Steps must be
taken to standardize the rest of the appeals process. There should be
one form and one set of rules for obtaining an exception. That form and
those rules should be posted on the CMS website and mailed to all
people with Medicare. Obtaining life-saving medications should not be
akin to navigating a mine-field.
[GRAPHIC] [TIFF OMITTED] T3132A.010
A standardized appeals process must also be a streamlined one.
Individuals should receive a formal denial before they leave their
pharmacy, complete with plain instructions on how to appeal that
denial. After an initial appeal to a Part D plan, individuals would
then appeal directly to the Independent Review Entity.
This would cut out an unnecessary and generally futile step.
Currently, after being denied a claim at the pharmacy, people with
Medicare must ask the plan twice to cover their drug before receiving
an independent review. Drugs subject to prior authorization require
three requests for coverage at the plan level before an independent
review is allowed. Each of these preliminary steps causes delay in
violation of mandatory timelines and at considerable risk to the well
being of the patient.
Further, for the current process to be meaningful, people with
Medicare require assistance in prosecuting appeals. The current system
assumes a helpful and willing physician. Do members of this Committee
know many doctors who are routinely willing to take on arduous,
uncompensated paper work for the sake of their patients? And who is to
help patients pursue appeals?
As noted, MRC is listed on plan denial forms as a go-to patient
advocate for people denied coverage of medicines prescribed by their
doctors.
How much does CMS contribute to this representation?
Nothing.
How much do the drug plans contribute?
Less.
If Congress wants people with Medicare to have access to medically
necessary drugs, it must standardize and streamline the Part D appeals
process, and provide assistance to individuals with bona fide appeals
of a plan's denial of medically necessary medications.
EXTEND THE MAY 15TH DEADLINE
It's difficult to believe that at some point in the next two weeks
the Administration will not move to extend the May 15th deadline for
enrolling in a Part D plan. From a bureaucratic perspective, we
understand that the Administration believes that adding the pressure of
a deadline on people will accelerate enrollment. From a humane
perspective, adding more stress on people already overwhelmed with the
anxiety of this complicated program will only add to more distress and
more bad decisions. The May 15 deadline will lock in those bad
decisions.
[GRAPHIC] [TIFF OMITTED] T3132A.011
Although the deputy administrator at CMS has declared publicly that
the agency lacks authority to extend the deadline, the Medicare Rights
Center has supplied CMS with a legal analysis showing that it is amply
empowered to create a special enrollment period that would cover this
calendar year. This would allow people not yet enrolled in a drug plan
to do so; perhaps more important, it also would allow people in the
wrong plan to switch to one that works better for their health care
needs. Justifications to create the special enrollment period are not
hard to find.
Computer systems problems--blame CMS, blame SSA or blame the plans,
they each blame each other--continue to leave people without coverage,
enrolled in the wrong plan, or charged the wrong amounts for the plan
that they are in. The insurer with the most Part D enrollees and the
best brand name startled people with Medicare over the last two weeks
by wrongly threatening to cut them off unless they promptly paid
already paid premiums.
As noted, high-pressure marketers have steered people with Medicare
into drug plans that do not cover their drugs and into HMOs that do not
cover their doctors.
And no one, not even the strongest proponents of the drug program's
design, anticipated that 40, 50 or even 60 plans would join the gold
rush in most states leaving consumers bewildered and ripe for
exploitation.
According to a Washington Post poll 71 percent of people polled
support extending the enrollment deadline. According to a Kaiser Family
Foundation poll, 45 percent of older adults say they do not know about
the deadline. Fairness requires Congress to extend the deadline if the
Administration refuses to exercise its power to do so.
DELAY THE ENROLLMENT PENALTY
Like the May 15th deadline, the prospect of a late enrollment
penalty creates needless anxiety among people with Medicare already
frustrated by a confusing choice of plans. The late enrollment penalty
accrues during the months people with Medicare are locked out of drug
coverage after May 15 and will rise each year as the average drug plan
premium rises. With all the problems and confusion associated with the
roll-out of the Part D benefit, it is inevitable that some people with
Medicare will miss the enrollment deadline. Congress should step in and
waive the late penalty for 2006.
People with Medicare below 135 percent of the federal poverty line
pay only 20 percent of the late penalty for a limited period of time--
literally just a few cents each month and less than the co-payments
they are now struggling to pay. But for this vulnerable group, just the
existence of a late penalty could discourage enrollment in the benefit.
The administrative cost of collecting this penalty is not worth the
revenue it generates. Congress should waive the late penalty for all
low-income people with Medicare.
ENACT A MEDICARE DRUG BENEFIT
[GRAPHIC] [TIFF OMITTED] T3132A.012
These eight reforms would be helpful, because we believe in the
principle that anything that helps a single person is a worthy reform.
But, even with these reforms the drug benefit will continue to waste
billions of dollars that could better be used to deliver a reliable and
comprehensive drug benefit to people with Medicare through the Medicare
program.
Americans need affordable prescription drug coverage that meets our
changing health care needs, a program that covers the drugs we need
today--and the drugs we will need tomorrow. Medicare provides a cost
effective and largely affordable safety net, reliably allowing older
and disabled Americans the peace of mind, the security of knowing that
medically necessary and reasonable health care services will be
covered. There is a human cost to abandoning that Medicare design for
the coverage of prescription drugs.
To provide a benefit as good as we can afford with finite dollars,
we think the lessons of Part D--objectively evaluated--teach that the
Congress should enact:
A drug benefit administered directly by Medicare,
without the waste and restrictions that come with private
health insurers as commercial, profit seeking middleman;
Negotiated drug prices that keep costs down; and
One comprehensible, reliable and secure drug benefit
that adapts to the needs of the American people now and in the
future.
Health security, not a health care lottery, is what people with
Medicare require. People in good faith may still believe, even after
the evidence of 2006, that the new cottage industry of for profit
middlemen hawking incomprehensible drug benefit packages is the way to
go. We do not think so. But we are content to allow those plans to
continue, so long as these middlemen face a real market. Let the for-
profit insurers compete with a Medicare drug benefit, one that fights
for lower prices, and keeps administrative costs low and profiteering
non-existent.
Honest supporters of a market approach cannot fear competition, not
even from Medicare. There is nothing to fear but a better deal for
people with Medicare and a fairer deal for the American taxpayer.
Chairman JOHNSON OF CONNECTICUT. Mr. Wolfe, do you think
you could make it in 4 minutes, and we can take you. We still
have to come back, and we will come back for questions.
Yes, why don't we come back. We will take the last two
testimonies. This is a vote, two 5-minute votes, so it will be
about 20 minutes. We will be back as soon as possible. Sorry
about this.
[Recess.]
Chairman JOHNSON OF CONNECTICUT. The hearing will resume.
Mr. Wolfe, would you begin.
STATEMENT OF BILL WOLFE, VICE PRESIDENT, MANAGED CARE, RITE AID
CORPORATION, HARRISBURG, PENNSYLVANIA
Mr. WOLFE. Good afternoon, Madam Chairman, Congressman
Lewis and Congressman Camp. I am Bill Wolfe, president of
Managed Care at Rite Aid Corporation, which is based in Camp
Hill, Pennsylvania. I am pleased to be here today.
Rite aid is one of the Nation's leading drugstore chains
and is currently operating 3,300 stores in 27 States and the
District of Columbia, with total sales of $17.3 billion.
Rite Aid and the chain drug industry recognize that the
implementation of Medicare Part D was a monumental task.
Community pharmacists were clearly front and center once again,
demonstrating their unique and very important position in the
health care continuum as one of the most accessible and most
trusted health care providers.
Given the scope of the program and some of the initial
technological and data integrity failures, it is remarkable, in
my opinion, how quickly the program stabilized. This would not
have happened without the unprecedented cooperation of all
stakeholders.
We appreciate the time that senior staff at CMS, as well as
congressional staff and Members of Congress, spent recently
visiting pharmacies, learning more about tremendous efforts
made by community pharmacists to make this program work.
Rite Aid spent countless hours and made significant
financial investment in systems and staff, preparing for
Medicare Part D. We had an intense focus on educating and
training our pharmacists. Our pharmacists and field management
teams conducted thousands of beneficiary outreach and
educational sessions in their communities. Through our health
plan partnerships, tens of thousands of beneficiary educational
sessions were conducted in our stores, and we included
messaging in our weekly ad circulars.
Through our preparation, pharmacists throughout the country
were able to anticipate some of the implementation issues.
While they struggled in the first few weeks of Part D, they
always gave every effort to take care of their patients.
There are ongoing issues which we think can be corrected.
First we will speak to the enrollment lag. If a beneficiary
applies for the Part D benefit in the last few days of the
month, an enrollment lag is created, and pharmacists don't have
the necessary data necessary to fill a prescription. The best
solution would be an enrollment deadline established each month
so there is sufficient time to process applications and enter
billing in the system.
We need to have standardized plan electronic messaging to
pharmacies. Health plan messaging needs to be clear and provide
actual information so pharmacists can promptly address a
patient's needs. The National Association of Chain Drugstores,
NCPA and AHIP have joined with CMS to help address this
problem.
Formulary issues have begun to be addressed. Many
beneficiaries are concerned that a plan could remove the drugs
they are taking now from the Part D plan's formulary in the
future. That is why we think that CMS's recent decision to
allow a beneficiary to continue taking a formulary medication,
even if the plan changes the formulary, is good for quality
health care and will reduce administrative burdens.
I am concerned about the coverage gap. The concern is that
Medicare beneficiaries do not fully understand the issues
relating to the so-called doughnut hole and how it will affect
their coverage. We believe that public-private sector
collaboration to develop assistance programs for beneficiaries
is imperative.
Community pharmacies are held to charging the beneficiary
no more than their discounted contract rate and therefore
contributes directly to assisting beneficiaries in the coverage
gap. Many beneficiaries will undoubtedly need additional
assistance to assure their access to needed medications.
We must also improve and reward quality. Improving quality
under Part D by providing medication therapy management is
important to everyone. Rite Aid has partnered with the
University of Pittsburgh School of Pharmacy to offer medication
therapy management services by specially trained Rite Aid
pharmacists.
We welcome the formation of the Pharmacy Quality Alliance,
which CMS has indicated could lead to new pharmacy payment
models based on optimizing the patient outcomes. Rite Aid
supports efforts on controlling costs by paying for better care
and improved outcomes, not by reducing payment rates to
providers.
While Medicaid is not in the Committee's jurisdiction, I
feel compelled to raise concerns about changes to the Medicaid
program as part of the Deficit Reduction Act, which will
substantially impact community pharmacies' ability to serve
Medicare as well as Medicaid patients.
The DRA reduces payments to pharmacies for generic
medications under Medicaid by about $6.3 billion over the next
4 years. We believe that the reduction in payment will take
away much of the incentive for pharmacists to dispense generic
medications. This is baffling, given that most States spend
less than 25 percent of their Medicaid pharmacy fund on
generics, even though generics are more than 50 percent of the
prescription volume.
Public and private payers should be doing everything they
can to increase, not decrease, the dispensing of generic drugs.
Generic drug utilization is one of the most cost-effective ways
to control prescription drug costs.
Reductions of this magnitude in Medicaid, coupled with the
current economic impact of the Medicare Part D program, will
unquestionably reduce access to pharmacies. Retail pharmacy is
an extremely competitive, low-margin industry operating on an
average profit margin of 2 percent. We hope that you will
support the delay or revision of these Medicaid pharmacy
payment changes as the industry adjusts to the operational and
economic challenges of Medicare Part D.
Thank you very much for this opportunity to share Rite
Aid's perspective. We will look forward to continuing to work
with Congress and the Administration on these issue. I will be
happy to answer any of your questions at the conclusion.
Chairman JOHNSON OF CONNECTICUT. Thank you very much.
[The prepared statement of Mr. Wolfe follows:]
Prepared Statement of Bill Wolfe, Vice President, Managed Care, Rite
Aid Corporation, Harrisburg, Pennsylvania
Good afternoon Chairwoman Johnson, Ranking Member Stark, and
Members of the Ways & Means Health Subcommittee. I am Bill Wolfe, Vice
President of Managed Care at Rite Aid Corporation, which is based in
Camp Hill, PA. I am pleased and honored to be here today to participate
in this important hearing on implementation of the Medicare Part D
prescription drug benefit program.
Rite Aid Corporation is one of the nation's leading drugstore
chains, combining its modern store base, strong brand name, modern
distribution centers and superior pharmacy technology with a talented
team of approximately 70,000 full and part-time associates serving
customers in 27 states and the District of Columbia. Rite Aid currently
operates approximately 3,320 stores, reporting total sales of $17.3
billion at the end of its 2006 fiscal year.
Preparing for the Medicare Part D Benefit
Rite Aid and the chain drug industry recognize that the
implementation of Medicare Part D was a monumental task and represented
the most significant expansion of Medicare since its inception. We are
pleased and proud to have played a key role in assuring that millions
of additional seniors now have access to prescription drug coverage as
a result of the Part D benefit. Community pharmacists were clearly
front and center and once again demonstrated their unique and very
important position in the health care continuum as one of the most
accessible and trusted health care providers.
As has been widely reported, there have been challenges for both
beneficiaries and pharmacists in transitioning to Part D, particularly
in the first few weeks of the program. We have all heard about the long
wait times that many beneficiaries had at their local pharmacy, and
about the lengthy periods pharmacists spent on hold with CMS and health
plans, trying to get the information they needed to dispense
prescriptions to their patients. Rather than rehashing the difficulties
that were experienced, most of which have improved exponentially, I'd
like to spend my time before the subcommittee discussing the steps Rite
Aid took to prepare for Medicare Part D, review the actions taken by
CMS, pharmacies, and plans to address some of the challenges that were
faced, and to provide Rite Aid's thoughts on how we can continue to
work together to improve the Medicare prescription drug benefit moving
forward.
Rite Aid and the rest of the chain drug industry appreciate the
efforts of CMS, states, and health plans in working collaboratively to
quickly address many of the initial implementation issues. Given the
scope of the program and some of the initial technological and data
integrity failures, it is remarkable in my opinion how quickly the
program stabilized. This would not have happened without the
unprecedented cooperation of all stakeholders. For example, CMS,
pharmacies, and health plans worked together to create the ``TrOOP
facilitator,'' a tool that allows pharmacies to electronically query a
special database and instantaneously obtain information about the Part
D plan in which a Medicare beneficiary has been enrolled, including the
beneficiary's billing information. Ideally, the TrOOP facilitator also
assists with the coordination of benefits with other payers. While
there have been some ongoing issues with incomplete and inaccurate
data, we hope that the TrOOP facilitator process will serve as a model
for how the public and private sectors should work together to address
future Medicare Part D issues. We must continue to work together to
assure continued improvement in the process as well as data integrity,
so that as the May 15 deadline approaches, or when we face other time
periods with peak enrollment, we do not experience the same
difficulties that we all faced in January of this year.
We also appreciate the time that senior staff at CMS, as well as
congressional staff and Members of Congress, spent in the last several
months visiting pharmacies and learning more about the tremendous
efforts made by community pharmacists to make this program work. I
personally toured stores with the Region 3 HHS Regional Director from
Philadelphia so he could interview pharmacists and observe their
interaction with Medicare beneficiaries. I am proud of all that Rite
Aid pharmacists--and other community pharmacists--have done to make
sure that Medicare beneficiaries receive their prescriptions in a
timely manner.
Rite Aid spent countless hours and made significant financial
investments preparing for Medicare Part D. We focused on educating and
training our pharmacists, starting with weekly messages and information
bulletins in April of last year. In addition, we had a chain-wide,
computer-based training (CBT) on Medicare Part D that was mandatory for
our pharmacists, and I'm happy to say that it achieved the fastest
uptake of any CBT ever conducted at Rite Aid.
Our pharmacists and field management teams conducted thousands of
outreach sessions in malls, senior centers, and places of worship with
education materials that we created with the help of our supplier and
health plan partners. Through our health plan partnerships, tens of
thousands of educational sessions were conducted in our stores, and we
included messaging that encouraged beneficiaries to seek out
information and signup in our circulars, which have a weekly
circulation of fifty million.
In addition to the many hours that our pharmacists and other
employees spent in preparation for Part D implementation, Rite Aid also
invested in system upgrades to accommodate TrOOP facilitation and
coordination of benefits billing. We also installed a new state of the
art telecommunication system and doubled the staff in our pharmacy help
desk area in anticipation of Medicare Part D implementation.
Through this preparation, Rite Aid pharmacists, as well as other
chain drug pharmacists throughout the country, were able to anticipate
some of the issues. While they struggled in the first few weeks of Part
D, they always gave every effort to take care of their patients. In
many cases, this meant providing needed medications without any
assurance of compensation. As I've stated, thankfully many of the
issues have stabilized and have been resolved. However, there are
ongoing issues that we think can be corrected to continue to ease the
administrative burden placed on pharmacists and to facilitate
beneficiary access to their medications.
Rite Aid has several suggestions on how some of the ongoing
implementation issues can be addressed:
Addressing Part D Issues Moving Forward
Fix Enrollment Lag: Individuals become eligible for Medicare every
day, and dual eligibles have the option of changing plans every month.
As a result, there is a systematic issue, commonly referred to as the
``enrollment lag,'' that is problematic for pharmacies and
beneficiaries.
Currently, a Medicare beneficiary can enroll in a Part D plan at
any time and expect their enrollment to be effective the first day of
the following month. If a beneficiary applies for the Part D benefit in
the last few days of the month, it is simply not possible for CMS and
the plans to process the beneficiary's application, confirm eligibility
with CMS, and provide the necessary billing information to the TrOOP
facilitator so that it is available to pharmacists in time for the
beneficiary to receive their prescriptions the first day of the next
month.
Unless policymakers address this ``enrollment lag'' issue, late-
month enrollment or plan switches may continue to be the single most
challenging issue that beneficiaries and pharmacists face with Part D.
If pharmacists don't have the necessary data, they cannot fill a
prescription. This takes pharmacists away from serving their patients,
and forces a series of calls to CMS and health plans to obtain billing
and enrollment information. Pharmacists and other pharmacy staff find
this experience very frustrating, but even more importantly, so do
Medicare beneficiaries, who are forced to wait for extended periods of
time at the pharmacy or return at a later date to obtain their
prescriptions.
A variety of options exist to address this issue, and Rite Aid and
the chain drug industry are committed to working with CMS and health
plans to find the best solution. CMS is trying to address this issue by
educating beneficiaries that enrolling late in the month will result in
delays in activation of prescription drug coverage. This is a step in
the right direction. Optimally, there should be an enrollment deadline
established each month so there is sufficient time to process
applications and enter the billing information in the system. We urge
policymakers to address this issue soon.
Standardized Plan Messaging: Virtually 100% of all prescription
claims are processed electronically, making pharmacy claims processing
far more efficient than any other segment of health care. These
efficiencies result in faster service to our customers, accuracy in our
claims processing, and cost savings to the entire prescription drug
delivery system.
Despite this efficiency, lack of standardization in messaging to
pharmacists among third party payers still results in pharmacists
spending much of their time on administrative issues. These third party
prescription administrative issues and the time that pharmacists must
devote to them have multiplied significantly since the onset of Part D.
Dozens of new Part D plans each have their own policies, processes,
and procedures for pharmacists to follow in order to fill
prescriptions. Some Part D plans want pharmacists to fax forms to
physicians when they need prior authorization to fill a prescription,
while other plans require the pharmacist to call the plan's help desk.
Furthermore, even when plans choose the same method of communication,
the message is not always clear. Merely telling a pharmacist that a
drug is ``not covered'' does not give pharmacists the information they
need. Health plan messaging needs to be clear and provide actionable
information so pharmacists can promptly address a patient's needs.
Once again, the pharmacy community is not just talking about the
need, we're taking action. I'm pleased to report on another public-
private partnership to improve the Medicare prescription drug benefit.
The National Association of Chain Drug Stores (NACDS), National
Community Pharmacists Association (NCPA), and America's Health
Insurance Plans (AHIP) have joined with CMS to help address this
problem.
Working together, these groups have started down the road of
developing uniform, standardized messages that will be sent
electronically to pharmacists when a prescription drug claim is
rejected. This will provide more information to the pharmacist on why
there might be an issue or problem with the prescription, as well as
help the pharmacist understand what to do next. The goal is to reduce
phone calls from pharmacists to health plans, allowing them to spend
more time with their patients. Rite Aid commends the leadership of CMS
and these associations for addressing this problem, and looks forward
to working with them on this and other issues to improve the Part D
benefit. We hope that this will serve as the first step in a broader
effort to promote more standardization in third party prescription
claims processing, pharmacy messaging, and procedures that would
benefit all public and private prescription drug programs.
Formulary Issues: There have been some difficulties for both
beneficiaries and pharmacists with understanding Part D drug
formularies and how they work. Many beneficiaries that come into our
pharmacies are concerned that in the future a plan could remove the
drugs they are taking from the Part D plan's formulary. Our pharmacists
are also concerned about the quality of care impact of switching
beneficiaries from a medication they have been taking for a long time
to a different medication. There are also concerns about whether
beneficiaries--especially low income dual eligibles--will be able to
navigate the exceptions and appeals process. That is why we think that
CMS' recent decision to allow a beneficiary to continue taking a
formulary medication--even if the plan changes the formulary--is good
for quality health care and will reduce the administrative burdens on
beneficiaries, physicians and pharmacists to switch medications for
Medicare beneficiaries.
Coverage Gaps: We are rapidly approaching the middle of the year
when many seniors may fall into the ``donut hole'' or coverage gap. We
are concerned that many Medicare beneficiaries do not fully understand
the issues relating to the ``donut hole'' and how it will affect their
Medicare coverage. Many of our pharmacists are concerned that they will
bear the brunt of beneficiary frustrations when they find out that they
are still paying premiums while in the ``donut hole,'' but not
receiving any coverage for their prescription medications.
We also believe that another public-private sector collaboration to
develop assistance programs for beneficiaries when they hit the
coverage gap would go a long way toward improvement of the program.
Community pharmacy is held to charging the beneficiary no more than
their discounted contract rate and therefore contributes directly to
assisting beneficiaries in the coverage gap. However, many
beneficiaries will undoubtedly need additional assistance to assure
their access to needed medications, so we believe that other parts of
the system should step forward and do their part as well.
Improve and Reward Quality: Improving quality in health care by
providing chronic care management, disease management and medication
therapy management programs is important to Rite Aid. We know that
Chairwoman Johnson and the Members of the Subcommittee recognize the
value of these programs in improving our health care system as well. At
Rite Aid, we have focused on these issues by partnering with the
University of Pittsburgh's school of pharmacy to offer medication
therapy management services by specially trained Rite Aid pharmacists.
These pharmacists work with patients to ensure that each is on the most
effective drug therapy to meet therapeutic goals and avoid medication-
related side effects. Pharmacists share results with each patient's
physician to ensure continuity of care. While this program is currently
centered in the Pittsburgh region, we have designed it to be scalable
and hope to continue to expand it throughout the country.
We believe that medication therapy management services like these
result in healthier patients. They also reduce health care costs for
payers, and go hand in hand with other ongoing efforts by pharmacists
to control health care expenditures, such as encouraging the use of
lower-cost generic drugs. That's why we welcome the recent announcement
by CMS Administrator McClellan on the formation of the Pharmacy Quality
Alliance (PQA), a collaborative effort among the pharmacy community,
health plans, employers, government payers, and others to improve
health care quality. In addition to developing strategies to define and
measure pharmacy performance, CMS has indicated that PQA could also
lead to new pharmacy payment models based on optimizing patient
outcomes. Rite Aid supports efforts that focus on controlling costs by
paying for better care and improved outcomes, and not by reducing
payment rates to providers.
Impact of the Deficit Reduction Act on Medicare
Community pharmacy has shouldered much of the economic and
administrative burden of implementing the Medicare Part D benefit. We
believe that we have been an important part of the rapid correction and
stabilization of the program. While Rite Aid and other pharmacies
across the country are still making adjustments as a result of Part D,
we will again be asked to shoulder an incredible burden only one year
later when drastic changes to the Medicaid program are implemented.
While Medicaid is not in this subcommittee's jurisdiction, I feel
compelled to raise concerns, as the changes to the Medicaid program as
part of the Deficit Reduction Act (DRA) will dramatically impact
community pharmacy's ability to serve Medicare, as well as Medicaid,
patients.
The DRA reduces payments to pharmacies for generic medications by
about $6.3 billion over the next four years. Beginning January 1, 2007,
federal upper limits (FUL) for generic drugs will be based on Average
Manufacturers Price (AMP), rather than Average Wholesale Price (AWP).
We believe that the reduction in payment will be so severe that it will
take away much of the incentive for pharmacists to dispense generic
medications. This is baffling, given that less than 25% of the average
state's Medicaid pharmacy payments are for generics, even though
generics are more than 50% of the prescription volume. Public and
private payers should be doing everything they can to increase, not
decrease, the dispensing of generic drugs, since generic drug
utilization is one of the most effective ways to control prescription
drug costs.
The Deficit Reduction Act also requires CMS to make Average
Manufacturers Price data available to states and the public beginning
in July--only two months from now. In theory, AMP reflects the average
prices paid to manufacturers by wholesalers for drugs distributed to
the retail class of trade, which include retail pharmacies. However, we
are very concerned that since there are no guidelines as to how
manufacturers should calculate AMP, the AMP data released by CMS this
July will be inaccurate and will not reflect the actual prices that
retail pharmacy pays for brand and generic medications. As a result,
states, Medicare plans, and consumers could receive a misleading
picture about the true acquisition costs of retail pharmacies. Medicare
plans and other payers could conceivably change their pharmacy
reimbursement based on faulty AMP data.
This data will be publicly available for one full year before CMS
is required to issue a rule instructing prescription drug manufacturers
on how to calculate AMP. Because of its potential damaging impact to
community pharmacy, we believe that this data should not be made public
or shared with the states until AMP is accurately and consistently
defined.
Reductions of this magnitude in Medicaid, coupled with the current
economic impact of the Medicare Part D program, will unquestionably
reduce access to pharmacies. Retail pharmacy is an extremely
competitive, low margin industry, operating on an average profit margin
of two percent. We do not believe that policymakers have taken into
account the cumulative economic impact that changes to Medicare and
Medicaid will have on retail pharmacies and the communities they serve.
We hope that you will support the delay or revision of these Medicaid
pharmacy payment changes, as well as the public release of these
inaccurate data, as the industry adjusts to the operational and
economic challenges of Medicare Part D.
Conclusion
Thank you again for this opportunity to share Rite Aid's
perspective on the implementation of the Medicare Part D benefit. We
look forward to continuing to work with Congress and the Administration
on these issues. I would be happy to answer any questions. Thank you.
Chairman JOHNSON OF CONNECTICUT. Ms. Grisnik.
STATEMENT OF PAM GRISNIK, OWNER, RX EXPRESS, GROVE CITY,
PENNSYLVANIA
Ms. GRISNIK. Good evening, Madam Chair and other Members of
the Subcommittee on Health. Thank you for conducting this
hearing and providing me the opportunity to share the
experiences with the new Medicare Part D program on behalf of
the NCPA. The NCPA represents more than 24,000 community
pharmacies, 55,000 community pharmacists, 250,000 employees and
millions of patients who rely on us for their prescription
care. The Nation's independent pharmacies dispense nearly half
of the Nation's retail prescriptions.
Independent pharmacists provide vital prescription services
in both rural and urban areas, where many patients could not
receive their prescription drugs were it not for their
neighborhood pharmacy and the relationships they have developed
with their local pharmacist.
My name is Pamela Grisnik, and I am from Grove City,
Pennsylvania. Sitting behind me is my husband Paul. We have
both been pharmacists for 24 years, the last 16 which we have
owned the RX Express Pharmacy in Grove City. We were also
members of the NCPA, the International Academy of Compounding
Pharmacists, and the Pennsylvania Pharmacists Association, of
which my husband Paul is on the executive council. We currently
employ 16 full-time staff people who provide personalized care
for approximately 12,000 patients in our community. We were
also sponsors for five pharmacy interns from three different
schools of pharmacy in western Pennsylvania.
We have built our practice in the face of numerous
competitors by focusing on patient care. Our patients' health
is our main concern.
The change I have seen in my practice since the start of
Medicare Part D can be summarized as follows. First, Part D
reimbursements are too low and too slow.
Secondly, unfortunately, the confusion around Part D
continues. The State previously reimbursed my pharmacy on a
weekly basis for prescriptions I filled for dual-eligibles. We
are currently waiting a minimum of 4 to 5 weeks for
reimbursement on these same prescriptions. Reimbursements are
simply too slow.
This past weekend I caught a drug interaction for a Part D
patient. After 45 minutes of my time, consulting with a doctor
and the patient, I finally was able to correctly fill the
prescription for this patient. I was unable to submit the claim
for the payment as the plan's computer system was down. Once
the claim finally was submitted, I discovered my total
reimbursement was $2, period, $2. That is it. Not even a
hamburger, $2; $2 to cover the medicine, the bottle, the label,
my technician, the rent, the utilities, not to mention the
pharmacist's time and the counseling. This reimbursement is
simply too low.
Thirty-six percent of independent pharmacy owners are
afraid that low and slow reimbursements will put them out of
business; 29 percent have asked their wholesaler for
assistance; 29 percent have taken out a line of credit. Cash
flow is worse for 93 percent of independents who are waiting on
an average of 70,000 in reimbursements from each Part D plan.
Low and slow reimbursements are a very, very real problem.
Secondly, the confusion of Medicare Part D does continue.
Many patients are already hitting the doughnut hole. They do
not understand the doughnut hole. Many pick up their
prescriptions. They leave. This has happened many times the
past couple of weeks. They come back. They throw their bag at
me and say, you made a big mistake. I paid $20; this is $160 or
$100. You have made a huge mistake, Pam. You better check your
records.
I try to explain the doughnut hole to them. They look a
little confused. Somehow they maybe remember. I usually call
the plan so they can actually hear from the representative from
their plan the bad news from the plan directly that this is the
doughnut hole, how much they have spent, how much more they
need to spend to get out of it. None of them really did expect
this yet, and few can afford the higher costs. The sudden
changes have confused the seniors, and the confusion continues.
Those who have not signed up are nervously eyeing the May
15 deadline. Many have tried to navigate their array of choices
and have really, truly been discouraged by the complexity of
the benefit. They do come into the pharmacy. They do throw
stacks of paper at me and say, please, Pam, Paul, will you
please help me go through this? Will you help me sign up? They
have been to seminars. They have been to many seminars. Some of
them are still very, very confused.
We are in a college town. One of our patients is a retired
college professor. She came in to me with her Part D papers and
said, I have a doctorate. I thought I was intelligent.
Obviously I am not.
The Medicare Part D benefit card should not be an
advertising space, yet some Part D benefit cards have the
featured logos of national chain pharmacies and retailers. Many
of my patients do not realize that they can still continue to
come to my pharmacy. They look at the card that has the
advertisement. They go to that pharmacy.
Some patients have returned to my pharmacy, but the
confusion does continue. Sometimes when they call the third
party, the Medicare program. They don't tell them that I am
part of the plan even though I am.
Many of the community pharmacies' concerns concerning Part
D are addressed by the Jones-Berry bill, H.R. 5182. This bill
does clarify the rules on cobranding, requires prompt payment
for properly submitted claims, and establishes a minimum
reimbursement on generic drugs. Chairman Cochran has also
introduced a similar bill in the Senate. These commonsense
improvements will ensure that Medicare Part D will deliver its
full promise for our seniors.
Some 15 years ago I myself was diagnosed with leukemia and
told I had a month to live. From that experience and from my
professional work, I do understand the importance of having
access to quality prescription care.
My fellow community pharmacists and I are looking forward
to working together with you to solve these current issues and
would like to ask for your help so that we can continue to
provide quality prescription care to our patients.
Thank you for inviting me to speak on this important issue.
I will be happy to answer any questions you may have.
[The prepared statement of Ms. Grisnik follows:]
Prepared Statement of Pam Grisnik, Owner, RX Express, Grove City,
Pennsylvania
Good Afternoon, Madam Chair and other members of the Health
subcommittee. 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,
55,000 community pharmacists, 250,000 employees and the millions of
patients who rely on us for their prescription care.
My name is Pamela Grisnik of Grove City, Pennsylvania. Sitting
behind me is my husband, Paul. We've both have been pharmacists for 24
years, the last 16 of which we have owned the Rx Xpress Pharmacy in
Grove City. We are members of National Community Pharmacists
Association, International Academy of Compounding Pharmacists and the
Pennsylvania Pharmacists Association, of which Paul is on the Executive
Council.
I am honored to testify today to give you the perspective of
independent, community pharmacy on Medicare Part D and to testify on
behalf of the National Community Pharmacist Association. NCPA
represents the nation's community pharmacists, including the owners of
more than 24,000 pharmacies, 55,000 pharmacists and over 250,000
employees. The nation's independent pharmacies dispense nearly half of
the nation's retail prescription medicines. Independent pharmacists
provide vital prescription services in both rural and urban areas,
where many patients could not receive prescription drugs were it not
for their neighborhood pharmacy and the relationships they have
developed with their local pharmacist.
Most pharmacists have three years of post-baccalaureate education
and we have extensive continuing education requirements. We consider
ourselves to be both health care professionals and small businessmen
and women. We take great pride in helping patients. When I decided to
go into this profession, my thinking was not, ``what kind of small
business can I own?'' Rather, I found a calling in helping patients
with their vital prescription needs--my decision to own a small
business came later. So my perspective in speaking to you today is not
to talk about Part D as a businessperson, but as a health care provider
who is concerned about my ability to continue to provide vital health
services in my community.
We currently employ 16 full-time staff people who provide
personalized care for approximately 12,000 patients in our community.
We are also preceptors for 5 pharmacy interns from three different
schools of pharmacy in Western Pennsylvania.
We have built our practice in the face of numerous competitors by
focusing on patient care. Our patient's health is our main concern.
The change I've seen in my practice since the start of Medicare
Part D can be summarized as follows: First, Part D reimbursements are
too low and too slow. Secondly, the confusion surrounding Part D
continues.
The state previously reimbursed my pharmacy on a weekly basis for
prescriptions I filled for dual-eligible patients. We are currently
waiting a minimum 4 to 5 weeks for reimbursement on these same
prescriptions. Reimbursements are simply too slow.
This past weekend I caught a drug interaction for a Part D patient.
After 45 minutes consulting with the doctor and patient I was finally
able to fill the correct prescription for the patient. I was unable to
submit the claim for payment as the plan's computer system was down.
Once the claim was submitted, I discovered my total reimbursement was
two dollars, period. Two dollars to cover the medicine, the bottle, the
label, my technician, the rent and the utilities, not to mention the
pharmacist's time and counseling. This reimbursement is simply too low.
36% of independent pharmacy owners are afraid that low and slow
reimbursements will put them out of business. 29% have asked their
wholesaler for assistance, and 29% have taken out a line of credit.
Cash flow is worse for 93% of independents, who are waiting for an
average of $70,000 in reimbursements from EACH Part D Plan. Low and
Slow reimbursements are a very real problem.
Secondly, the confusion of Medicare Part D continues. Many patients
are already hitting the donut hole. They don't understand what has
happened. Many will pick up their prescriptions, leave, and come back
to the pharmacy thinking that I did not charge them correctly. ``Last
month my pills were $20, now they're $100 . . . What happened?'' After
explaining the donut hole, I usually call the plan so patients can hear
the bad news from the plan directly. None of them expected this yet,
and few can afford the much higher costs. The sudden changes have
confused seniors. The confusion continues.
Those who have not yet signed up are nervously eyeing the May 15th
deadline. Many have tried to navigate the array of choices and have
been discouraged by the complexity of the benefit. They come into the
pharmacy, throw us a stack of papers in desperation saying, ``Please,
can you and Paul please help me, tell me what to do.''
We are a college town, one of our patients is a retired college
professor. She came to the pharmacy with her Part D papers and
declared, ``I have a doctorate. I thought I was intelligent, but I
obviously am not.''
The Medicare Part D benefit card should not be an advertising
space. Yet some Part D benefit cards have featured the logos of
national chain pharmacies and retailers. Many of my patients did not
realize they could continue coming to my pharmacy. Some of my patients
believed they could only patronize those pharmacies featured on the
benefit card. Some patients have returned to my pharmacy, but again the
confusion continues.
Many of community pharmacy's concerns regarding Part D are
addressed by the Jones-Berry bill, H.R. 5182. This bill clarifies rules
on co-branding, requires prompt-payment for properly submitted claims,
and establishes a minimum reimbursement on Generic drugs. Chairman
Cochran has also introduced a similar bill in the Senate. These common-
sense improvements will ensure that Medicare Part D will deliver its
full promise for our Seniors.
Some 15 years ago I was diagnosed with leukemia and was told I had
a month to live. Both from that experience and from my professional
work I do understand the importance of having access to quality
prescription care.
My fellow community pharmacists and I are looking forward to
working together with you to solve these current issues and would like
to ask for your help so that we can continue to provide quality
prescription care to our patients. Thank you for inviting me to speak
on this very important issue and will be happy to answer any questions
you may have.
Neither I nor my husband, nor community pharmacists and NCPA, wish
to give you a litany of complaints. Pharmacists and NCPA have never
opposed the goal of Medicare Part D: providing prescription drug
services to some patients that otherwise would not be able to acquire
them. Others on these panels have already spoken regarding the degree
to which that goal has been achieved. We know that this program has
been working for some. There has also been some progress on
implementing Part D, such as a reduction in the long wait times on our
calls to CMS.
II. Problems with Part D
I would be doing you and the Program disservice, however, if I did
not address the continuing, systematic problems with Part D that
threaten to negate what is working with the program, and what were
designed to be cost-saving aspects of the program. A legislative fix is
needed, and one particular one, the Jones-Berry FAST Act, fixes some of
the on-going problems.
In sum, those problems are: (1) delays in reimbursements hurting
the ability of pharmacists to keep their doors open and provide
services; (2) not getting adequate payments that reflect the costs of
dispensing drugs, thus creating a perverse incentive to dispense brand
name drugs; and (3) continued co-branding, which confuses seniors and
other Medicare recipients into thinking they have to stick with the
companies printed on the benefit cards.
A. Closures Caused by Implementation Hurt Patients and Communities
Independent pharmacists have been the backbone of the delivery
system for Medicare Part D. In fact, they have saved the program by
bearing its financial and bureaucratic burdens. Secretary Leavitt has
been quoted as saying that ``no patient should leave the pharmacy
without their prescription.'' Unfortunately, that has happened to me in
certain cases where the patient has been unable to wait while I am on
hold with CMS while getting authorizations. Some patients have handed
back filled prescriptions in anger and walked out of our pharmacy. When
patients do leave my pharmacy without a prescription, it is not because
of the pharmacists. Pharmacists pay for the drugs they dispense, and
then often wait months for reimbursement by the prescription drug
plans--despite the fact that the PDPs are paid in advance for the
drugs, and then they sit on processing the claims. Pharmacists are
acting as private banks to these plans while the plans hold onto
government money--that is to say, taxpayer dollars.
Because of the reimbursement flow problem, since the implementation
of Part D began in January of this year, some one dozen independent
pharmacies have already had to shut their doors. In rural areas, these
closures have a truly harmful effect on the health care of Americans
dependent on Medicare--particularly the elderly. Because it addresses
this problem and the problem of adequate dispensing fees, we and NCPA
support the bipartisan Jones-Berry FAST bill.
In response to a NCPA survey on Medicare Part D conducted just a
couple of weeks ago:
1. Over half of the respondents (53%) serve a population of
less than 20,000 people; and
2. Over 99% of the respondents currently participate in the
Medicare Part D program.
3. Of the total number of prescriptions the pharmacists
dispense monthly, some 34% of those are covered by Medicare
Part D.
In addition, in certain urban areas, the percentage of
prescriptions covered by Medicare and Medicaid reaches some 90%.
Continued closures will affect many patients who will not have the
resources to travel distances of tens of miles to the nearest community
to get their prescription needs met. In addition, these patients will
have lost the important face-to-face interaction with their local
pharmacist, who often will have great knowledge about their particular
medical histories, including allergies and other sensitivities.
B. Cash Flow Problems are Very Real
That same survey found that:
1. 61% have obtained outside financing--from sources such as
banks, wholesalers, credit unions and family members--to deal
with the financial shortfalls they face regarding Medicare Part
D.
2. The average current outstanding balance that is owed to a
pharmacy by all Part D plans is just under $70,000.
From a survey taken a month ago,
1. Some 93% of all respondents have found that pharmacy cash
flow is worse as compared to before the implementation of
Medicare Part D--only 1% found it to have improved.
2. Of those that have worse cash flow, some 36% are concerned
about closing their pharmacy, 29% have asked their wholesaler
for assistance, and 29% have opened a line of credit.
III. Suggestions for Change:
The Jones-Berry FAST bill addresses the cash flow problem, includes
an adequate dispensing fee and also eliminates the harmful practice of
co-branding.
1) There needs to be a prompt pay provision.
Implementation of Medicare Part D has caused a major cash flow
problem for the community pharmacies on the front line of the program.
Part D plans are paid each month in advance by Medicare, yet most Part
D plans are using delaying tactics to enjoy a considerable interest-
earning ``float'' on taxpayer dollars intended to reimburse pharmacies
for serving their patients.
There are several bipartisan bills in Congress that address prompt
pay. Community pharmacists and NCPA most strongly support H.R. 5182 and
S. 2563--the Jones-Berry ``Fair and Speedy Treatment (FAST) of Medicare
Prescription Drug Claims Act of 2006'' and the Cochran/Enzi/Talent/
DeWine Pharmacist Access and Recognition in Medicare Act (PhARMA) of
2006.'' In both bills, clean claims submitted electronically would be
paid by prescription drug plans (PDPs), within 14 days, by electronic
direct deposit. Other clean claims would be paid within 30 days.
Pharmacists would also be notified within 10 days if there are problems
with submitted claims.
These are the minimum changes that Congress should make. In real
life operations, the Plans in fact have the ability to make these
transactions much earlier than the 14 and 30 day deadlines--and that
even with passage of legislation, the Plans will continue to unfairly
profit from a longer than necessary ``float.''
2) Pharmacists need to receive an adequate dispensing fee
Prompt payment will increase timely cash flow, but unless an
adequate dispensing fee is set, independent pharmacists will continue
to operate at the mercy of PDP ``take-it-or-leave-it'' contracts. These
plans and the middlemen that manage them--the prescription benefit
managers (PBMs) will continue to reap high profits.
If dispensing fees for generic drugs are not set at an adequate
minimum level, then pharmacists will see an increase in the number of
Medicare Part D drugs for which they do not receive enough compensation
to cover costs.
An adequate dispensing fee will also insure that taxpayers will
benefit from an increase in generic drug use, which saves both
taxpayers and the program an average of $94 for every generic
prescription dispensed.
A legislative fix, such as is contained in the Jones-Berry bill,
would encourage the use of generics, saving money and lowering health
care costs.
What comprises an adequate dispensing fee? True costs to dispense
should include all reasonable costs associated with a pharmacist's time
in checking information about an individual's coverage or performing
quality assurance activities. The total compensation that a pharmacist
receives for dispensing a Medicare drug should consist of an adequate
ingredient, or acquisition cost, a technical formula that is designed
to reflect real life market forces, and an adequate dispensing fee
minimum, which reflects overhead costs--the costs of doing business.
Unfortunately, PDP plans have taken advantage of individual pharmacists
to force--on a take-it-or-leave-it basis--plans that offer an
inadequate dispensing fee.
An adequate dispensing fee should include, at a minimum:
(i) the measurement or mixing of a covered Part D drug;
(ii) filling the container for such a drug;
(iii) physically providing the completed prescription to an
individual enrolled in such a plan;
(iv) delivery;
(v) special packaging;
(vi) overhead related to maintaining the facility and
equipment necessary to operate the pharmacy, including, but not
limited to, rent, mortgage, salaries of pharmacists and other
pharmacy workers; and
(vii) geographic factors that impact operational costs.
3) 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 in law a prohibition against this practice, not just a
recommendation by CMS that the plan can't put a pharmacy logo on a
patient's prescription card.
We know we have lost patients who had the logo of a large chain
pharmacy on their cards and thought they could not get their
prescriptions filled at our pharmacy.
Pull out your social security card. Is there an advertisement on
that card? There should not be any advertising on the card 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.
H.R. 5182, the Jones-Berry FAST Act--include a provision that
prohibits co-branding, and we urge Congress to include such a provision
in any Medicare Part D legislation that it might pass.
We know CMS has issued a call letter in which it requests PDPs to
not include co-branding cards in their contracts for 2007. We are glad
that CMS recognizes that co-branding is illogical, misleading and
harmful to patients. A legislative fix is needed, however, as the
advisory language is not yet binding and could be changed before it
goes into effect.
Secondary issues include:
4) 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.
5) 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 has 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.
6) 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 my husband and I enjoy being
pharmacists and we believe we are making a difference for the thousands
of patients who come in to our pharmacy. 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. We hope you will work with us to help
improve the Medicare Part D program so we can continue serving our
patients.
Chairman JOHNSON OF CONNECTICUT. Thank you all for your
testimony. I appreciate it very much.
Ms. Grisnik, I would be happy to work with you on some of
the problems that you raise. In my part of the country, most
of, or at least in many instances, the problems that you point
to have been worked out. I am interested that you still are--
for instance, we can looked into the payment process before
this hearing.
The news that we are getting is it is back down to 2 weeks,
but 2 weeks is what these plans have always been using. It is
what is in their contracts. It is unlikely it will come in
lower. Now, if you get somebody who comes in on day 14, it may
be 2 weeks plus a day.
Ms. GRISNIK. As I left, I checked. It was still about four.
Maybe it will shorten up in our system. It was still around
four.
Chairman JOHNSON OF CONNECTICUT. We will talk to the
Administration about that, because that is unbearable.
As to the doughnut hole, in States that have programs like
Connecticut or Pennsylvania, there are about six States that
have subsidy programs that rise about the 150 percent of
poverty income, and Connecticut goes to 235. All of those
payments count toward the doughnut hole.
So, those people are not exposed. We are saving the State
so much money that they can easily start a program that pushes
that 150 percent of poverty income up. For a Federal program,
pairing with the States, that is actually higher than many of
the programs that we do with States. So, it was a good place to
start, and the logic was we are going to be saving the States
so much money not just on their Medicaid patients, but also on
their own State employees, that they can plow some of that
money back into a program that provides some help for those who
need it.
Then, of course, the bill also allows families to help with
that doughnut hole. There will be developing community
organizations that will help.
It is important to have those who can afford it to pay
their freight, because if they do, their kids don't have to.
When you look at the salaries that are currently being paid,
never did any of us think we would live in a world in which
there are really obscene salaries being paid. You certainly,
when those people retire, want them to pay, make their personal
effort.
So, structuring a plan for the years ahead, you have to
take into account the seniors that are sitting there that could
be paying if they needed to. There are 3,500. I will be one of
them. I think we do have to structure a plan so that those who
can carry 3,500 after the ordinary amount, because the
threshold covers two-thirds of seniors, almost two-thirds of
the seniors.
With wise use of generics, it is unlikely that more than a
third of seniors will be affected by that gap. Of that third, a
fair percentage, I would say 50, 60, 70 percent, can actually
afford that personal effort contribution.
Now, I understand perfectly that there are those that
can't. That is why we made other contributions eligible, and
that is why I hope the States will begin to define that for
themselves and maybe make a phase-out rather than a cliff. That
is one of the refinements that has to take place.
I notice that Mr. Hayes was very critical of the structure
of the plan. Earlier the issue was raised about the plan now
costing $800-and-something billion. That is over a different
time frame. I would remind you that using $1.3 trillion is not
accurate because it is not a net figure.
The original plan that competed with ours when ours was
$400 billion was $1.3 trillion. So, if ours has gone from $400
billion to $8 billion, theirs would have been gone from $1.3
trillion to $2.6 trillion.
Having people make a personal difference is that difference
between $2.6 and $800 plus billion. Now, that is important,
because seniors who can afford to help need to help, otherwise
their children have to pay higher taxes. Today, as we speak, 50
percent of all Federal spending goes to people over 65.
Now, we want people over 65 to be secure financially and
secure medically, but we have to do it in a way that those who
can afford it carry more responsibility, and we did in the
Medicare Modernization Act raise premiums, Part D premiums, for
those with higher incomes. This is following that pattern.
I think we need to look at the margin; where does the 150,
in my State it is 235 or 225--they keep pushing up. Some States
will need to go to 250. Some need to go to 200 percent of
poverty. We have some opportunities in the bill to do that.
I am much more concerned with the mechanics of the plan and
leaving independent pharmacists exposed, as you line out in
your testimony. Mr. Wolfe, as you comment as well.
While that is not the jurisdiction of this Committee, in
fact, we are interested in those programs, those problems, and
we will follow along with you and work with you to resolve
them.
My time has expired. Mr. Stark.
Mr. STARK. Thank you, Madam Chair.
Before I inquire of the witnesses, I just wanted to tell
you that on our side, we are having so much fun that we want to
continue this, so that we are going to invoke our rights under
rule 11 to call witnesses to discuss Part D and have an
additional hearing on this matter, and our letters outlined
some of the witnesses that we would like to call.
Having taken care of that little bit of business, I would
like to ask Mr. Schiesser, you note in your testimony that a
CBO study says that Part D plans should save 20 to 25 percent
off retail, but your discounts are only 15 percent below
typical cash prices, which I presume is retail. Why the
discrepancy?
Mr. SCHIESSER. I would have to look at the specifics of the
CBO study, but my assumption is that incorporates estimates for
savings related to formulary management and medical management.
I would say that what we seek is to maybe create a very clear
apples-to-apples program for you.
Oftentimes when we go in with State Medicaid programs, our
company does a lot of Medicaid programs, and we are about to be
doing that in Mr. Lewis's home State of Georgia and others. We
typically see that we are able to save about 10 to 20 percent
versus what the State Medicaid program is providing for the
costs of the pharmacy.
Mr. STARK. Even in States that had the lowest price?
Mr. SCHIESSER. Yes.
Mr. STARK. In California, where we had Medicaid, we had a
lowest price requirement for Medicaid drugs, and we found that
the prices paid have been higher.
Mr. SCHIESSER. What we are finding, sir, while I am not
familiar with the numbers in California in particular, what I
think we have seen nationwide is with many of the States
stepping in and keeping their Medicaid flags on for the first
few months of this program, and as CMS has put in place the
demonstration project to reconcile those payments back to the
States, one of the issues has been that typically the States
have been paying more than the plans, and so CMS is having to
step in to keep the States whole.
Mr. STARK. I am looking for the numbers, but I want to say
at the beginning of this, you are to be commended. I gathered
that your loss ratio historically is right around 80, 81
percent for your medical plans; is that about in the ballpark?
Mr. SCHIESSER. For our Medicaid plan, that is correct.
Mr. STARK. That is good, I might add.
If you pull 5 percent, 6 percent, whatever you pull out of
that for profit, you are still running around a 15 percent
overhead. From my limited experience, where we used to be able
to talk about loss ratios, that is about as good as it gets in
the private sector.
How do you respond then to Mr. Emanuel's previous
suggestion that if we had Medicare offer a plan, a direct plan
in competition, they wouldn't be in competition with your
managed care plans, but you don't have fee-for-service plans,
so that is ostensibly what we would offer. We would probably
offer a three, four--you can argue what the overhead of
Medicare is, and presumably they would be able to buy at least
as inexpensively as you can.
Could you compete with us?
Mr. SCHIESSER. So, I think we compete with Medicare fee-
for-service today on the Medicare Advantage side.
Mr. STARK. That isn't doing worth poop. The Republicans
will give that turkey up in no time. It doesn't have, what, 5,
10 percent of the Medicare beneficiaries signed up?
Mr. SCHIESSER. In many of the markets in which we compete,
Medicare health plans have more than 20 percent penetration in
the market.
Mr. STARK. Wow.
Mr. SCHIESSER. In fact, in a market----
Mr. STARK. If you were a betting man, we could bet about
how long those turkeys would continue to fly.
Mr. SCHIESSER. We are very bullish on Medicare, very
candidly, even when other plans around the country were, say,
less bullish on Medicare.
Mr. STARK. You mean Medicare Advantage?
Mr. SCHIESSER. Yes, sir, thank you. We have always been
committed to the program and trying to grow.
Mr. STARK. Well at 115 percent of what fee-for-service gets
paid, it would take a genius to get into that and lose money.
You are getting a 15 percent bonus over what fee-for-service is
getting for arguably perhaps providing more limited benefits.
So, that would be pretty tough to be in that racket and not
make money.
Mr. SCHIESSER. I think ours--and, please, I defer to your
tremendous knowledge in this area, but some of the counties I
have looked at, especially when you consider the graduate
medical education component of the Medicare reimbursement--for
example, Broward County was one of the ones I mentioned in my
testimony. We are actually paid about a third of a point less
than Medicare fee-for-service costs when you consider graduate
medical education. I believe if you don't include it, it is
about 99.5, so it is darn close.
Mr. STARK. I would like to look at those figures, because
that will be an unusual district that that would happen.
My time has expired.
Chairman JOHNSON OF CONNECTICUT. I would just point out
that the legislation itself does allow the plans to circumvent
the law that allows States to have Medicaid get the lowest
price. So, by circumventing those State laws that guarantee the
lowest price to Medicaid, we are seeing, as you testified, Mr.
Schiesser, that you can get prices below the Medicaid price. We
wouldn't have been able to get prices below the Medicaid price
if we hadn't circumvented those State laws. We are getting
unusually low prices for that reason.
It is, Mr. Stark, true that the figure you are putting on
the record of 115 percent, that was driven by the Rural Caucus
in the Congress that pushed the Medicare reimbursement rate for
rural areas up. So, when you average that out, it sounds
higher. He gets lower than that because he is not--those plans
that are not in rural areas. So, the national average figures
make it look like there is one price being offered, but the
reality is that those are in the rural areas where there were
no plans, and the goal was to pull plans into the rural areas;
not a policy I agreed with, but that has pushed the average up.
Mr. English.
Mr. ENGLISH. Thank you, Madam Chair.
It is a real privilege to have you come and gone from
Mercer County in my district and take your time to present your
own perspective as someone who is out on the front lines, so I
very much appreciate it.
I have been hearing from a lot of local pharmacists that
they have faced some special challenges in the implementation
of this plan.
A couple of things in your testimony I was very taken with.
In your county, as you know, as of April 18, nearly 15,000 out
of the slightly over 21,000 individuals over 65 have
prescription coverage. There has been a significant number of
people participating in this program.
I was struck by one of your recommendations on prompt pay.
On the face of it, it is a sensible suggestion. You suggested
there needs to be a prompt pay legislation that would direct
prescription drug plans to pay clean, electronically submitted
claims within 14 days, and other clean claims within 30 days.
I am curious. How does this compare with the payment you
received from other non-Medicare private payers?
Ms. GRISNIK. That is very similar.
Mr. ENGLISH. Does the NCPA have a Part D plan, do you know?
Ms. GRISNIK. Not that I know of. There is community----
Mr. ENGLISH. Community Care?
Ms. GRISNIK. Community Care. I am not certain what the
affiliation is.
Mr. EVERETT. What is that plan's payment policy?
Ms. GRISNIK. Their payment policy. Now, I would have to
double-check to make sure with my secretary, because I do not
check all of these, but I would say it is 14 to 21 days right
now.
Mr. EVERETT. So, it is actually--you are not even sure that
it would fall within the 15-day parameter.
Ms. GRISNIK. Right, 14.1. I believe, don't quote me. I
could double-check and let you know, Mr. England.
Mr. ENGLISH. I would be curious. Our impression is that
they pay more within a 30-day time frame.
Ms. GRISNIK. I could check my records at the store and just
let you know.
Mr. ENGLISH. Is 30 days, in fact, an unreasonable time
frame in which to pay claims? After all, my experience with my
credit cards is such that a 30-day turnaround time is not
unreasonable.
Ms. GRISNIK. Unfortunately we must--our wholesalers
electric fund transfer weekly, so it does put a strain on an
independent pharmacy because we are paying our bills every
week.
Mr. ENGLISH. Sure.
Ms. GRISNIK. It does put--as you are putting out, the
faster you can get it in, the easier it is to make those
payments to your wholesalers.
Mr. ENGLISH. You also state in your testimony that an
adequate dispensing fee should be set at an adequate minimum
level. In your view, who should set that fee? Should one fee
apply to all plans equally, or would there be geographic or
other variations? How would you envision or your association
would envision that fee be updated?
Ms. GRISNIK. That I would like to double-check and get back
to you. I do feel it needs to be an adequate fee that would
cover a pharmacist, at least their overhead.
As I said, with a $2 prescription, there is no way that it
even covered the bottle and the label for me just--let alone I
happened to be working and it is my business. If I hire a
pharmacist, I am paying large sums per hour and my technicians.
There needs to be some equitable fee so that we are getting
paid for our--at least for our overhead.
I would like to double-check. I could get back to you with
that information.
Mr. ENGLISH. I would welcome it.
[The information follows: PENDING.]
Mr. ENGLISH. Again, I appreciate your independent take on
these things. I guess my question is if the government starts
setting dispensing fees based on the variables you referenced
in your testimony, they will be subject to fluctuations, which
at various points may help or hurt the pharmacies that we are
trying to help here. As a result, I am a little skeptical on
how the fee structure would work.
The other point I wanted to make, from your testimony, you
bring up cobranding by drug plans, the use of company logos
like Wal-Mart on beneficiary plan cards. What you found is that
this has the potential to steer beneficiaries away from
independent pharmacies.
Ms. GRISNIK. It does do that indeed. I had a patient this
past weekend who brought me his insulin that he could not buy
from the other pharmacy. He said, I guess I will have to pay
full price here because you do not take my card.
Mr. ENGLISH. You also acknowledge, though, that CMS is
attempting to address the issue. Dr. McClellan in his testimony
states that with the beginning of fiscal year 2007 marketing on
October 1 of this year, PDP sponsors will not be able to place
cobranding names and logos on their ID cards.
This seems to me to be one of those areas where CMS has
been responsive to a lot of complaints they have heard.
Ms. GRISNIK. Are they requiring them?
Mr. ENGLISH. Do you have any problem with what they are
doing?
Ms. GRISNIK. No. Are they requiring them?
Mr. ENGLISH. Absolutely.
Ms. GRISNIK. Who is going to enforce it?
Mr. ENGLISH. CMS is. It will be part of the contracting
process.
Chairman JOHNSON OF CONNECTICUT. Will the gentleman yield?
Mr. ENGLISH. Certainly.
Chairman JOHNSON OF CONNECTICUT. It is part of next year's
standards. You can't do anything about it this year. It is next
year's because the cards have already been issued. The next
year's competition.
Ms. GRISNIK. That leaves a lot of time frame though.
Chairman JOHNSON OF CONNECTICUT. I appreciate that, but the
cards are already out. How are you going to do that? We can do
a better job of educating them. We will talk to them about it.
Mr. ENGLISH. Thank you, Madam Chairman. I appreciate your
coming from Mercer County to share.
Ms. GRISNIK. Thank you for having me.
Chairman JOHNSON OF CONNECTICUT. Mr. Lewis. I am glad to
see, Mr. Lewis, that 69 percent of your seniors have signed up.
That is more than are signed up for the Medicaid--who are
eligible for the Medicaid program. So, that is really great.
Mr. LEWIS. Thank you very much, Madam Chair. Thank you very
much. Let me thank all of the witnesses for being here.
Mr. Wolfe, Rite Aid must have customers that have already
reached the doughnut hole. Do you think you would have a
customer that won't be able to afford that prescription under
the coverage gap?
Mr. WOLFE. I am concerned about that, Congressman. That is
where I think Madam Chairman talked about some assistance
programs that are available in States in Pennsylvania. The
Program of All Inclusive Care for the Elderly is looking to
address that issue for lower-income Pennsylvanians. I think in
other parts of the country, some private sector assistance
programs along the lines of the manufacturer assistance
programs could also go a long ways. I was glad to hear that
Office of Inspector General (OIG) has set out a framework for a
formula that would allow them to step in and offer some
assistance in that regard.
Mr. LEWIS. Wouldn't it hurt your business if your customers
are not able to pay for their prescription drugs?
Mr. WOLFE. More than their business, it would potentially
harm the patient. Our primary concern is that the patient get
the medications they need; but certainly, yes, it would not be
good for our business either.
Mr. LEWIS. Do you plan to help any of your patients pay for
their prescription drugs during the time----
Mr. WOLFE. Congressman, we do help with that. The
pharmacies are held to their discounted rate that they have
contracted with the payer and passed that to the beneficiary
while they are in the doughnut hole.
They do not revert back to a cash price.
Mr. LEWIS. Ms. Grisnik, thank you for being here. Thank you
for your testimony. We have heard many stories to back up your
testimony that payments to pharmacists by Part D, plan sponsor,
are too low, too slow. You have mentioned that some pharmacists
have gone out of business.
Ms. GRISNIK. That is my understanding, yes.
Mr. LEWIS. Really. Could you describe, what do you mean by
too slow and too low; they are not paying enough?
Ms. GRISNIK. Well, the too slow, of course, is the time
frame from the time the drug was dispensed and then you get the
payment for the actual prescription. Too low would be as an
example, especially with our generics, that that prescription,
that particular prescription I spoke of that is $2, was a
generic prescription. I can't dispense a prescription for $2. I
can't give somebody a prescription for $2.
Mr. LEWIS. You are independent. You are not part of a big
chain?
Ms. GRISNIK. I am not. We own our own pharmacy. We do have
buying groups that help us facilitate buying so that we do get
the best price possible. So, we buy with several others. We buy
with large wholesalers, we buy with co-ops to get the price of
our goods down as far as we can. I can't dispense a medication
for $2. That is it.
Mr. LEWIS. Do you have any idea how many other independent
pharmacies, drugstores, will be forced to close if the pay is
inadequate and too slow?
Ms. GRISNIK. If the pay is inadequate, especially on
generic, it will not be just independents, it will hit the
chains, too. It will be devastating to the pharmaceutical
community.
Mr. LEWIS. Do you have any recommendation for this
Committee, for CMS?
Ms. GRISNIK. Well, they need to look at their payment
structure, especially for generic.
Mr. LEWIS. Mr. Hayes, do you have anything to add?
Mr. HAYS. I will follow up on your question about what
pharmacists can do when patients show up during the doughnut
hole. I do commend many pharmacists, community pharmacists,
chain pharmacists, who did right in January and February to
save the day, saved the lives in many cases for many people who
had lost their Medicaid drug coverage and were being switched
theoretically into the Medicare drug coverage. Many really did
help and simply gave free prescriptions. Ultimately 35 or more
States had to come in with emergency plans to help these folks.
I think that what we heard today, though, is that is not
something that the pharmacists continue do to do to bail people
out to save folks' lives. I think that is why probably most of
us are here today to look for help from Congress.
Mr. LEWIS. Thank you.
Madam Chairman, my time has expired.
Chairman JOHNSON OF CONNECTICUT. Let me just comment--never
mind. Let me recognize my friend from Texas.
Mr. DOGGETT. Thank you so much, Madam Chair. Thanks to all
of you for your testimony and for staying here late with us
through the votes.
Mr. Hayes, we have seen, of course, this afternoon a
tremendous amount of collective back-patting and congratulatory
comments about what a wonderful job has been done on this
Medicare Part D program.
I am interested in particularly the folks that I understand
is one of the focuses of your organization; that is, folks who
have qualified for the so-called Extra Help program. We are now
down to 2 weeks, less than 2 weeks before the statutory or
official deadline of May 15. I know it has been extended for
those folks. What portion of those who are eligible to receive
that help, the people that are in greatest need among our
seniors for the prescription drug program, what portion of them
are signed up in the great success we heard about today?
Mr. HAYS. According to most government estimates, there are
about 8 million people poor enough to be eligible for this
Extra Help program. These are folks who simply cannot afford to
pay their way through the doughnut hole, who cannot afford the
copayments and the premiums.
Ms. Disman from the SSA this morning, or this afternoon, I
think, reported that about 1.7 million of those 8 million folks
had, in fact, been enrolled. I think that is 17 or 18 percent
have enrolled up to now.
Mr. DOGGETT. After all the great efforts and all the great
success that we have heard about today, and the people, the
greatest need, the success rate is about 17 or 18 percent?
Mr. HAYS. That is correct. Even comparing it, it was even
depressing to me to have the witnesses earlier today. To
compare whatever, the Part D enrollment rate or, much worse,
this low-income subsidy, also known as Extra Help program,
enrollment rate to food stamps, Medicaid and other disgraceful
rates that we have for other programs is somewhat infuriating,
I think, given the amount of human need to have a program that
goes unmet, to have----
Mr. DOGGETT. It really is. The 17 or 18 percent is an F or
an F minus, if there is such a grade, in my book, and that is
the grade that applies, I think, in some other areas.
Mr. DOGGETT. To me, it has been a big question of whether
the taxpayer has been fleeced in this bill more than the
seniors, but I think there is enough of a problem to go around.
Much of that problem was also discussed by you, Ms. Grisnik,
and it is consistent with the concerns that I have heard from
many of the small towns that I represent particularly; and a
little different population perhaps than you have, but similar
concerns, where I have many people who speak most comfortably
in Spanish and going to a community pharmacy down the block who
can speak with them in Spanish about the counseling that they
need and the interaction between the drugs is a big factor. as
I talk to some of those pharmacists, some of them tell me they
get no dispensing fee at all for doing that for an extended
period. That has been the experience of you and some of your
colleagues.
Ms. GRISNIK. I'm sorry? No dispensing fee?
Mr. DOGGETT. That they receive no dispensing fee on the
drug that they might provide counseling to someone about it at
all. They get zero.
Ms. GRISNIK. That is correct. On that one prescription I
got no dispensing fee.
Mr. DOGGETT. Have you and your organization turned to the
CMS people to ask that CMS intervene and try to assist on this
dispensing fee issue?
Ms. GRISNIK. I have not personally. Whether my organization
has, that needs to be addressed, I am sure.
Mr. DOGGETT. Another concern that I have had voiced from
some of theses pharmacists is they do not get any electronic
payments. I am sure that the plans themselves expect to get
electronic payments from the government, but this is not
happening to the community pharmacists.
Ms. GRISNIK. That is correct. Some are not doing
electronic. We get electronic payments from so many of our
third parties. It should be all.
Mr. DOGGETT. Basically the relationship between the
individual pharmacists and some of these plans, the
prescription benefit management organizations, is not
dissimilar from that between an individual physician and a
health maintenance organization; that all the bargaining power
is on one side, and you are charged for making an inquiry if
someone comes into your pharmacy and thinks they have coverage
under a particular plan and you contact them, that you get a
charge just for making an inquiry.
Ms. GRISNIK. That is correct. If you transmit on line to do
an inquiry, you do get charged. That is correct.
Mr. DOGGETT. So, you may get charged for making an inquiry
for someone who did not keep up their premium or was dropped
off a plan.
Ms. GRISNIK. Yes.
Mr. DOGGETT. That may be on the same prescription that you
get no dispensing fee on.
Ms. GRISNIK. That is also correct.
Mr. DOGGETT. Thank you so much for your testimony.
Chairman JOHNSON OF CONNECTICUT. Thank you. Ms. Grisnik,
how frequently does the State pay you?
Ms. GRISNIK. Our State pays us every week.
Chairman JOHNSON OF CONNECTICUT. Are not many of your
patients Medicaid or dual-eligible and fall under that payment
regimen?
Ms. GRISNIK. Our regular access patients pay us every week,
but some have fallen--they have routed them out to different
HMOs and those, unfortunately, are not keeping up the same way.
Chairman JOHNSON OF CONNECTICUT. In those instances where
the State has stepped in and just paid while they straighten
some of those enrollment issues out, have they paid promptly?
Ms. GRISNIK. In the beginning, from those particular ones?
Chairman JOHNSON OF CONNECTICUT. That was about 2 or 3
months.
Ms. GRISNIK. I would have to double-check and get back to
you. Actually my office manager would know that better than I.
Chairman JOHNSON OF CONNECTICUT. Mr. Hayes, what percentage
of that group are on Medicaid, this 17 or 18 percent?
Mr. HAYS. None, Madam Chairman. The people who are on
Medicaid were automatically enrolled into the extra health
program so the 8 million folks that have been targeted by a lot
of our groups to go out and enroll people manually, if you
will, those are people who are still very poor but not Medicaid
eligible. Am I confusing that?
Chairman JOHNSON OF CONNECTICUT. You are confusing numbers
in the sense that when the witness from SSA testified, she was
testifying to a very narrow group. I do not know the
relationship between her number and the other numbers, but the
150 percent of poverty and under presumably are in this group
that the States and the Federal Government are transferring
information about and hoping to work out and will not be
affected by the May 15 deadline.
Mr. HAYS. That is correct. The 8 million people who are
eligible for signing up for extra help can do it May 16.
Chairman JOHNSON OF CONNECTICUT. So, it is not right to say
that those who need it most are not getting it. Those who need
it most not only are getting it, but, because there have been
problems in the system, they have no deadline.
Mr. HAYS. No. The people who are getting extra help, the 6
million people with Medicaid, are indeed getting that extra
help, Madam Chairman, but they lost their--many States--better
Medicaid coverage in the process. So, it is the people who
really we are reaching out to----
Chairman JOHNSON OF CONNECTICUT. I appreciate that the ones
that need it most are the ones like--States like Connecticut
and Pennsylvania subsidize, and other States. The State has not
been subsidizing them and they were paying themselves because
they mostly did not have prescription drug coverage.
Now a lot of what we are seeing in the 8 million that did
sign up themselves were mostly people who did have prescription
drug coverage before. They are the ones we wanted to reach. We
think that by the time sign-up is done, there will be 4 million
not covered; 4 million not participating or not needing to
participate; and of those, 2 million are expected to be in this
group that is hard to reach, that is low income. The other 2
million, it will not be clear exactly who they are until we get
further down the line.
To even be talking about 4 million or 5 million from 42
million in 125 days is an accomplishment. That is all; I think
it is important for the record to reflect. It is important for
the record to reflect that we still have a job to do, and it is
also important for the record to reflect that we have had a
better partnership than we ever had, and that some of the
problems with the small pharmacies are due to the contracts. As
the Administration looks at what are going to be the
requirements in the contracts in the future, which is what they
are doing now, that is our chance to address contracting
problems.
The government has never set, to my knowledge, pharmacy
reimbursement rates. That is usually a matter of contract, and
a pharmacy can choose to participate or not choose to
participate.
It is very helpful to have your testimony about what you
see as the problems out there in the front line. We will reread
those just as carefully as anything else. It is a great point
of pride that so many of you have been out there, hands on, one
to one; because, in a new program, especially when it involves
insurance, should be one to one. Nobody likes choosing an
insurance plan, even if it is one their employer offers.
I would have to say that on the Medicare Advantage plans, I
had a senior in Waterbury, Connecticut give me a long lecture
on why was I not talking about them more, because he was paying
zero premium for drugs and some additional benefits, including
copayments.
So, these plans are offering a very good bundle of
benefits. The reason they can do it is because they can use
drugs in preventative health to keep people out of hospitals
and emergency rooms, and that cuts their costs.
So, we can learn something from them, particularly as we
move into an era in which we need to help seniors manage an
array of chronic illnesses. We do not need to be like them. We
just need to learn how to provide more integrated care, and the
systems do that.
We have a lot of options out there. We have had some
remarkable accomplishments. We have some problems. The only way
to confront them is get them on the public record, which we
have done today. We will help to work out the remaining
problems with you. Thank you very much for being here. We
appreciate your attendance.
The hearing will recess for just a few minutes.
[Recess.]
Chairman JOHNSON OF CONNECTICUT. Before I adjourn the
hearing, I would like to respond to the letter handed to me by
my Ranking Member, Mr. Stark, and signed by the members of the
minority. It is a letter notifying that they want to have a
rule 11 hearing. It claims that we failed to include important
witnesses necessary to enable the Subcommittee to fully examine
the issues and they, at a minimum, would likely invite.
Now they would like to invite a State Medicaid director.
They had requested that such a director testify at this
hearing, and we did not have room for that. So, that is one
that we did not invite.
They wanted to invite UnitedHealthcare. We did invite
UnitedHealthcare. We also invited AARP. Both of them rejected
the invitation.
Mr. DOGGETT. Will the gentlewoman yield? Just on the
UnitedHealthcare, my understanding was that they agreed to come
and they were not invited.
Chairman JOHNSON OF CONNECTICUT. They were invited and they
declined to come.
We invited AARP, who works with them, and they declined to
come.
GAO and the Kaiser Family Foundation were discussed, and
then we have an e-mail dropping the request for them.
You cite the OIG that you would like to invite, but you
never suggested the OIG for this hearing. In the letter you
suggest that you would like to invite retiree coverage, raise
the issue of retiree coverage, but you did not raise that issue
before this hearing. In the letter you asked to raise the issue
of beneficiary membership organization, have a beneficiary
membership organization testify. You did just have that at this
hearing, and he did a very fine job.
So, I wanted to put on the record that of those that you
say you were likely to invite, some we agreed to invite and
they declined; some you dropped, some you invited, and others
were not brought up. Nonetheless, you have a right to have a
hearing. We have a right to set the time. So, we are going to
have this hearing tomorrow at 2 o'clock.
Thank you. The hearing is adjourned.
[Whereupon, at 6:39 p.m., the hearing was adjourned.]
CONTINUATION OF THE HEARING ON
IMPLEMENTATION OF THE
MEDICARE DRUG BENEFIT
----------
WEDNESDAY, MAY 4, 2006
U.S. House of Representatives,
Committee on Ways and Means,
Subcommittee on Health,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:50 p.m., in
room 1100, Longworth House Office Building, the Honorable Nancy
Johnson (Chairman of the Subcommittee) presiding.
Chairman JOHNSON OF CONNECTICUT. Good afternoon, everyone,
and welcome to this continuation of the Committee's hearing on
the implementation of the Medical Part D prescription drug
benefit. I am delighted to have another opportunity to talk
about this program that is so important in the lives of our
seniors and to talk about the remarkable partnerships that our
Centers for Medicare and Medicaid Services (CMS) has developed
with the private sector, unprecedented in the effort by any
Administration and any part of the Government to get the public
involved in a benefit that the Congress has funded.
Whether it is Food Stamps, whether it is Medicaid, whether
it is Supplemental Security Income benefits, we have never seen
such a high level of participation in 125 days as we have been
able to generate in the Medicare prescription drug benefit, and
that is because it is so important to the seniors of America.
From April 20 to April 27, 36,906 seniors were signing up
per day. From April 27 to today, 56,303 seniors per day are
enrolling. That is because, as I have seen in my own district,
seniors are saving hundreds of dollars, thousands of dollars;
in one instance, a couple saving $5,000. If you lived on a
fixed income, and that income was low or moderate, you, too,
would want help with your prescription drugs, and I am very,
very pleased that the Medicare Part D plan is serving seniors
all across America, and we are on track by May 15 and the weeks
thereafter, as low-income seniors have a right to continue
signing up, we are on track for Medicare Part D and other plans
that working Americans over 65 are participating in to have 90
percent of the 42 million seniors in America with good drug
coverage.
Over the next few months, I believe at least 2 of those
last 4 million will sign up. Even without them, a 90 percent
coverage rate in 125 days of our 42 million seniors is an
absolutely astounding record. So, I am delighted to be here
today to talk again about this program. Of course,
implementation challenges, we heard yesterday how those
challenges were owned by the Government; never.
I have served under four Presidents. I have served under
many CMS administrators. Never have I seen the Government so
willing to take ownership of problems, create collaborative
relationships to solve them, and put in place the ability to
deal with the problems, to get to the people who need the
benefit. We heard about all the partners, over 10,000 partners
yesterday; indeed, a remarkable performance, and one through
which in the future, make no mistake about it, those
partnerships are not going to service just in terms of getting
people involved in the Medicare Part D benefit, which is
important, but far more important than any one benefit, those
partnerships are going to help us close the gap between
minority and other senior groups in health care by giving us
the means to reach out to our seniors and deliver to them the
preventive benefits we passed the preventive benefits we have
prepared in the Medicare Modernization Act which go directly to
the issue of helping the seniors of America manage the chronic
illnesses that plague their elder years.
So, those partnerships are just the beginning of a
relationship that is important for government to be able to
help its constituents lead healthier lives. So, I am happy to
be here, and I yield to my colleague, Pete Stark.
Mr. STARK. Thank you, Madam Chair, and thank you for your
courtesies in extending this hearing to accommodate additional
witnesses. I want to thank the witnesses who appeared today and
appreciate their willingness to appear on such short notice.
Some proponents of Part D seem to believe that appearance
may be as important as performance, but given the lives and
dollars that are at stake, I am not sure that is an acceptable
position. This Committee should be rigorous in its oversight,
and we have heard time and time again about this being the
biggest change to Medicare since its creation.
Yet, yesterday was our first hearing, and we have a lot to
cover. With this law affecting tens of millions of people and
spending up to a trillion dollars in the next 10 years, I think
our obligation to account for that spending and know what is
happening is paramount. While, as you know, I am no fan of this
program or the partisan process by which it was created, my
Democratic colleagues and I I think have been very clear that
we do not want to see it repealed. We do feel that definitely,
changes are needed.
The Administration and Committee leadership would like to
chalk everything up to run of the mill implementation problems
and suggest it is all being worked out. I do not believe that
is the case, and neither do our constituents, objective policy
experts, State Medicaid directors, many physicians and
pharmacists. The problems seem to run far deeper, and while I
must acknowledge there is not much we are likely to be able to
do this year--we never seem to be able to do anything
courageous in even-numbered years, but if we had to resort
solely to parliamentary tactics, I think this would be
unlikely.
Once the Committee has a full and common understanding of
the situation, I hope we can use what we have learned to
improve the program, and today's witnesses should give us a
broader understanding of how the law is affecting the
beneficiaries, including those most vulnerable, for whom this
law was allegedly targeted. The witnesses, I think, will help
us understand why it is difficult for the beneficiaries and
their advisors to navigate this program and help clarify the
record with respect to drug prices, and we are going to hear
from United, the American Association of Retired Persons, the
largest Part D plan, and they are already covering, I think,
4.5 million beneficiaries and have received $4.5 billion or
thereabouts from CMS. Seems to me that they were an outstanding
witness to hear from. We are going to hear about the importance
of oversight and making the data publicly available.
We have 56,000 enrollees a day. If that is the correct
figure, we would need 130 more days to get the remaining 7.2
million enrolled, and I did that math with my shoes and socks
on. Yet, we only have 11 more days, so that by token, we are
hardly going to get 560,000, 600,000 in.
So, the next step, I believe, is to extend the deadline and
also the corresponding late enrollment penalty. To do so at
this hour would achieve the goal of having a deadline to hasten
enrollment but not penalize those who have not been reached,
were misinformed, could not navigate the system,
procrastinated, and it would probably only bring, according to
CMS' concern, more healthy people into the program, and that is
exactly what we want to do. That will hold the cost down.
So, I look forward to today's testimony and discussion to
see if we can get closer to getting those last 7 or 8 million
people in the program. Thank you.
Chairman JOHNSON OF CONNECTICUT. Thank you.
Welcome, Mr. Waxman.
STATEMENT OF HON. HENRY WAXMAN, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF CALIFORNIA
Mr. WAXMAN. Well, thank you very much, Madam Chairman and
Members of this Committee. I am honored to have been invited to
come to the Committee on Ways and Means and talk about the
subject of this Medicare prescription drug benefit, but I do
not need to tell anyone on this Committee of the problems with
the new drug benefit. You have all been back to your districts
and heard the complaints from seniors who cannot get the drugs
they need, or cannot cut through the plans' complications--the
dozens of different plans, each with different copays,
premiums, deductibles, and formularies--to sign themselves up.
Now, as the May 15 deadline for enrollment looms, millions
of seniors face life-long penalties for not signing up for this
flawed program in time. The Medicare bill is increasingly
looking like a poor deal for too many seniors. The new program
is incredibly complicated. Too many of our most vulnerable
seniors are falling through the cracks, and it is costing
seniors and the taxpayers too much.
One of the justifications for the plan's confusing scheme
involving dozens of private insurers is that these plans would
be able to provide seniors with lower prices. This is simply
not the case. The prices that the plans are charging seniors
are way too high. They are well above prices that aggressive
Government negotiators like the Veterans Administration (VA)
pay. They are well above the prices that consumers pay in
Canada. They are even higher than the prices available through
large retailers.
I would like to give you a few examples of the kinds of
price differences that we are seeing. Recently, my staff looked
at the prices offered by 10 leading Medicare insurance plans
for 10 popular brand name drugs. The average Medicare prices
were more than 75 percent higher than the prices negotiated for
the Federal Government by the VA. They were almost 60 percent
higher than prices in Canada. They were higher than the prices
at Drugstore.com or Costco.
With the new Medicare plans, beneficiaries pay an average
price of $111 for the ulcer drug Protonix, but the Federal
Government pays only $24 for the same drug, a 425 percent
difference. Similarly, Medicare beneficiaries pay an average
price of $129 for the heartburn medication Nexium, but
consumers in Canada pay only $67.
The prices offered by the Medicare drug plans did not just
start out high. They also went up, and they did so rapidly. CMS
began posting information on the prices offered by the Medicare
drug plan in November 2005, and seniors began choosing plans
and signing up in December. At this point, many were locked
into a plan. In February, my staff looked at whether plans were
increasing their posted drug prices for beneficiaries. They
found that in the first two months of the Medicare program, the
drug plans increased their prices by over 4 percent. The vast
majority of plans increased their prices, with some plans
increasing prices by over 10 percent.
These price increases in the first two months of the
program were greater than the inflation rate for all of 2005.
They were over twice as high as drug price increases in Canada,
and contrary to critics of the analysis, they increased even
faster than the published average wholesale price for the same
drugs. These massive price differences and the rapid price
increases make little sense. For beneficiaries, they increased
out of pocket drug costs, reduced purchasing power, and
undercut the assistance provided by the Medicare drug benefit.
For taxpayers, who will also end up footing the bill for higher
drug prices, they will ultimately mean billions of dollars in
extra costs.
There are other problems with the Medicare drug benefit as
well. One of the biggest complaints that we have heard from
seniors is they are not able to get the drugs they need, and
they are encountering hidden restrictions on drugs that are
listed on the plan formulary. The problem is that plans are
using additional tactics to restrict use. They require prior
authorization before a drug can be prescribed or limit the
quantity of a given drug that they will pay for or require that
the beneficiaries use a different drug first.
The use of these restrictive tactics mean that even if
seniors have carefully researched a Medicare drug plan, they
can still encounter obstacles in obtaining medications. While
the use of restrictive tactics by Medicare drug plans is
widespread, the disclosure of their terms is virtually
nonexistent. Over two-thirds of the Medicare drug plans
contacted in a phone survey were unable to describe accurately
how prior approval, step therapy, or volume limits worked with
their particular plan. Several times, plans were called twice
consecutively and gave completely different answers to
identical questions about whether plans restricted access to
drugs and how these restrictions worked.
The net result of all of this is that even if they
carefully researched the plan, too many beneficiaries cannot
get the medicine they need. The complexity of Medicare Part D
is putting many seniors in a Catch 22 predicament. They are not
able to make a fully informed choice about a Medicare drug plan
without knowing whether the plan will limit their access to
drugs listed on the plan formulary, but even though the use of
these restrictive tactics is common, it is nearly impossible
for seniors to learn their terms until they have already
subscribed and then been denied access to the drug.
Well, over and over, we talk to seniors; we investigate the
facts; we come across a common theme: the Medicare prescription
drug plan is not working for seniors. It is too complex. Many
seniors are unable to sign up; are unable to get the drugs they
need when they do sign up for a plan, and the plans are just
not able to control prices and give seniors the low cost that
they were promised.
We need to take another look at this Medicare plan.
Clearly, given the complexity and confusion surrounding the
program, we should extend the May 15 deadline. Seniors should
not be penalized because Congress passed the legislation that
created this flawed drug benefit, and we should do all that we
can, including letting the Government negotiate for better
prices to guarantee that seniors and taxpayers get their
money's worth.
Thank you for this opportunity to make this statement, and
I would be happy to answer any questions that Members may have.
[The prepared statement of Mr. Waxman follows:]
Prepared Statement of The Honorable Henry Waxman, a Representative in
Congress from the State of California
Thank you for asking me to testify today.
I don't need to tell anyone on this Committee about the problems
with the new drug benefit. You've all been back to your districts, and
heard the complaints from seniors who can't get the drugs they need, or
can't even cut through the plan's complications--the dozens of
different plans, each with different copays, premiums, deductibles, and
formularies--to even sign themselves up. Now, as the May 15 deadline
for enrollment looms, millions of seniors face life-long penalties for
not signing up for this flawed program in time.
The Medicare bill is increasingly looking like a poor deal for too
many seniors: the new program is incredibly complicated; too many of
our most vulnerable seniors are falling through the cracks; and it is
costing seniors and the taxpayers far too much.
One of the justifications for the plan's confusing scheme involving
dozens of private insurers is that these plans would be able to provide
seniors with lower prices. But this is simply not the case. The prices
that the plans are charging seniors are way too high. They are well
above prices that aggressive government negotiators like the VA pay;
they are well above prices that consumers pay in Canada; and they are
even higher than the prices available through large retailers.
I'd like to give you a few examples of the kinds of price
differences that we are seeing. Recently, my staff looked at the prices
offered by ten leading Medicare insurance plans for ten popular brand
name drugs. The average Medicare prices were more than 75% higher than
prices negotiated for the Federal Government by VA; they were almost
60% higher than prices in Canada. And they were higher than the prices
at Drugstore.com or Costco.
With the new Medicare plans, beneficiaries pay an average price of
$111 for the ulcer drug Protonix. But the Federal Government pays only
$24 for the same drug--a 425% difference. Similarly, Medicare
beneficiaries pay an average price of $129 for the heartburn medication
Nexium. But consumers in Canada pay only $67.
The prices offered by the Medicare drug plans didn't just start out
high. They also went up--and they did so rapidly. CMS began posting
information on the prices offered by the Medicare drug plans in
November 2005, and seniors began choosing plans and signing up in
December. At this point, many were locked into a plan.
But in February, my staff looked at whether plans were increasing
their posted drug prices for beneficiaries. They found that in the
first two months of the Medicare program, the drug plans increased
their prices by over 4%. The vast majority of plans increased their
prices, with some plans increasing prices by over 10%.
These price increases in the first two months of the program were
greater than the inflation rate for all of 2005. They were over twice
as high as drug price increases in Canada. And, contrary to critics of
the analysis, they increased even faster than the published average
wholesale price for the same drugs.
These massive price differences, and the rapid price increases,
make little sense. For beneficiaries, they increase out-of-pocket drug
costs, reduce purchasing power, and undercut the assistance provided by
the Medicare drug benefit. For taxpayers, who will also end up footing
the bill for higher drug prices, they will ultimately mean billions of
dollars in extra costs.
There are other problems with the Medicare drug benefit as well.
One of the biggest complaints that we've heard from seniors is that
they are not able to get the drugs they need, and that they are
encountering hidden restrictions on drugs that are listed on a plan
formulary.
The problem is that plans are using additional tactics to restrict
use--they require prior authorization before a drug can be prescribed,
or limit the quantity of a given drug that they will pay for, or
require that beneficiaries use a different drug first. The use of these
restrictive tactics means that even if seniors have carefully
researched a Medicare drug plan, they can still encounter obstacles in
obtaining medications. And while the use of restrictive tactics by
Medicare drug plans is widespread, the disclosure of their terms is
virtually nonexistent.
Over two-thirds of the Medicare drug plans contacted in a phone
survey by my staff were unable to describe accurately how the prior
approval, step therapy, or volume limits worked with their particular
plan. In a number of cases, plan representatives had no idea what these
terms even meant. In a number of other cases, Medicare drug plans
provided erroneous or conflicting information about restrictions.
Several times, plans were called twice consecutively and gave
completely different answers to identical questions about whether plans
restricted access to drugs and how these restrictions worked.
The net result of all this is that even if they carefully research
a plan, too many Medicare beneficiaries can't get the medicine they
need. Beneficiaries with high blood pressure are not able to obtain
their medication in their prescribed dose. Arthritis patients have been
denied the recommended doses of painkillers that they need. Mental
health patients are unable to get appropriate doses of antipsychotic
medications. These stories are heartbreaking, and they show how far
short this program falls from what it should have been--a simple and
dependable part of Medicare.
The complexity of Medicare Part D is putting many seniors in a
``Catch 22'' predicament. Seniors are not able to make a fully informed
choice about a Medicare drug plan without knowing whether the plan will
limit their access to drugs listed on the plan formulary. But even
though the use of these restrictive tactics is common, it is nearly
impossible for seniors to learn their terms until after they have
subscribed and been denied drug access.
Again and again, when we talk to seniors and investigate the facts,
we come across a common theme. The Medicare prescription drug plan is
not working for seniors. It's too complex, leaving many seniors unable
to sign up or unable to get the drugs they need when they do sign up
for a plan. And the plans just are not able to control prices and give
seniors the low costs that they were promised.
We need to take another look at this Medicare plan. Clearly, given
the complexity and confusion surrounding the program, we should extend
the May 15 deadline. Seniors should not be penalized because Congress
passed the legislation that created this flawed drug benefit. And we
should do all that we can--including letting the government negotiate
for better prices--to guarantee that seniors and taxpayers get their
money's worth.
Chairman JOHNSON OF CONNECTICUT. Thank you very much,
Representative Waxman.
You know, in Fort Smith, Arkansas, the St. Boniface School
sixth graders took on as their community service project
learning to use the Pathfinder, and under instruction, with
careful instruction, they learned to use it. One day a week,
they dedicated to signing up seniors in their hometown, and
they signed up 300 seniors. Ethan said to the First Lady when
she visited down there recently to commend them, he said, this
is a mountain out of a molehill. This is not hard.
I tell that story because I have had many a senior call to
my office and say, oh, this is so complicated. We say, have you
tried it? They say, oh, no, no. In the papers, they say it is
so complicated. I said, well, try it. Let us help you try it.
Indeed, when they get their prescriptions written down and
their number written down, they find it not so hard, and the
proof is in the pudding. In the Kaiser Family Foundation
survey, they found that 54 percent of the seniors who were
signed up chose their own plans.
When you put that up against the overwhelming satisfaction
rate and the majority that either understood very well or well
their plans, you have to say that when you use the tools that
are provided, and you follow the directions, seniors are
finding this a wall they can penetrate, and they are signing up
in droves.
You also have to consider, at least I am surprised that you
do not take a little more time to think through the
extraordinary partnerships that the Government has developed
with the Hispanic community, the National Association for the
Advancement of Colored People, black churches; well, out at
Martin Luther King's own church, they are having yet another
signup. At black churches throughout America, there have been
signups. There are Hispanic hotlines, Spanish-speaking hotlines
in many States in many areas; Meals on Wheels, it really is
about time Government understood they need to speak to people
where they are, and if they cannot speak to them through the
written word or the computer word or the telephone voice, they
need to speak to them one-on-one, person-to-person.
That is what is different about this outreach area. You and
I worked hard on getting the children's health plan in place,
nothing the was extraordinarily disappointing to see the first
year signup numbers. They were pathetic. Even after five years,
they were pathetic. Even now, in Connecticut, with enormous
resources dedicated to getting people into what we call Husky,
still, in my hometown, with a Federal grant, with someone
stationed in the emergency room, half of the, quote, uninsured
were covered by either Medicaid or Husky.
So, this is quite a remarkable performance that such a huge
percentage of our seniors are going to be signed up if they
needed to be signed up by May 15. So, I hear what you are
saying about the problems. There have been problems. I assume
that you were very pleased with the Administrator's
announcement about the policy governing formulary changes
recently, which straightens out a lot of the problems and will
give him a chance to set down new markers in the next round of
contract requirements.
Mr. WAXMAN. I thought that was a good proposal to say that
they could not take the drug off the formulary once people had
signed up and were using that drug. There is no requirement
that is going to keep a plan from doing that. It is simply a
guidance. There is nothing in statute to keep them from
changing the policy later. Second, it does not deal with the
price increases for those drugs.
Chairman JOHNSON OF CONNECTICUT. A point of note, though.
The fact is that part of his announcement was that they have
always had to come to CMS and inform CMS, but he made clear
that CMS would only accept changes in the formulary where a new
generic had come onto the market or safety concerns had been
raised about a drug that was part of the formulary. So, it was
not just that if you were on a drug you could continue taking
it. It also very much changed the flexibility of the formulary
during the calendar year.
Mr. WAXMAN. It did nothing about price increases. Once you
sign up, and you get that drug, that drug can increase in price
quite rapidly, which is, of course, a problem for seniors,
and----
Chairman JOHNSON OF CONNECTICUT. I am sure my colleagues
will have lots to say with you about the pricing. I wanted to
limit my comments, because we do find that we really have to
with so many Members stay within our 5 minutes, and as
Chairman, I wanted to stay within my 5 minutes, and as
Chairman, I wanted to stay within my 5 minutes. I agree with
you there is a lot to be said about pricing and a lot to be
said about the success of this program in lowering prices.
Mr. Stark.
Mr. STARK. Thank you, Madam Chair, and thank you very much,
Henry, for being with us.
I want to ask kind of a type of inquiry that I know you
will hate, and that is to ask you to be your own devil's
advocate for a moment and explain, if you can, if you can take
the other side, CMS seems to dispute some of your data on
popular drug prices and the question of Costco being lower. Can
you explain what their objection to your analysis is and why
you think your data is the correct way to look at the prices in
Part D?
Mr. WAXMAN. Well, there are some important differences
between the CMS studies and our studies. Our pricing studies
show that private Medicare drug plans are not obtaining good
prices on the drugs used by beneficiaries and that other
negotiators, like the Federal Government, could get much lower
prices on the brand name drugs that account for the majority of
drug costs.
One big difference between the studies is that the CMS
study mixed together both brand name drugs and generics, and
this made their price savings seem bigger than they actually
are. The most important area where seniors need to save money
is on expensive brand name drugs, and the Medicare plans just
are not able to provide those savings.
Second, the CMS study inflates price savings by comparing
Medicare drug plan prices to an inflated cash price that does
not reflect what seniors are really paying at the pharmacy
counter. Our study compares prices to four different
benchmarks: the Federal negotiated VA price, the Canadian
price, the prices at Costco and Drugstore.com. These
comparisons show that Medicare plans are not obtaining the low
prices. Finally, the CMS study takes into account the impact of
the Federal subsidy for all beneficiaries who sign up for the
drug plans, which average about $1,600 per beneficiary.
So, the CMS study shows that seniors save money when they
take advantage of the subsidy, but it does not show that
Medicare plans are negotiating low prices. There are other
flaws with the CMS study as well. For example, it fails to take
into account the fact that Medicare drug plans can and do raise
prices at will, and our study shows that Medicare drug plans
are not able to obtain low prices for seniors. The CMS study
has so many differences and so many important flaws that I
think it fails to address this issue.
Mr. STARK. Thank you very much.
Thank you, Madam Chair.
Chairman JOHNSON OF CONNECTICUT. Mr. Johnson.
Mr. JOHNSON OF TEXAS. Thank you, Madam Chairman.
Henry, can I quote you? You said----
Mr. WAXMAN. Well, you can. Are you able to?
Mr. JOHNSON OF TEXAS. Yes, I have it right here.
Certainly, there were people who were not covered before
who are pleased to have new benefits. Certainly, we all welcome
success stories, and we want this benefit to work. For too many
seniors and persons with disabilities, it has not worked. It
has been a disaster. I wonder how you can say that when 68
percent of the seniors in your district have signed up for this
plan.
Further, you said drug prices under the new Medicare drug
plans are too high, rising too fast. The Medicare drug bill was
written to enrich the drug companies, not to provide seniors
with a cost-effective, new benefit, and the Bush Administration
mismanagement and incompetence has made the problem worse.
You know, with the number of seniors that have signed up in
your district, I wonder if they think the prices are too high.
I would suggest to you that our studies show that they have
gone down, as a matter of fact, quite a bit from where we first
estimated they will be.
Mr. WAXMAN. Well, Mr. Johnson, I do not know whether 68
percent of the people in my district have signed up or not, but
the fact they signed up does not mean they are happy, or they
are satisfied with this drug plan, especially for those people
who signed up and then found out there were restrictions on the
availability of drugs that they intentionally checked to be
sure were on the plan's formulary. So, a lot of people have
come to me and complained about that.
I look at this whole drug program, and I do not see
savings. I see the plans not holding down the prices at all
especially when you compare it to situations where the prices
are held down, where the Government negotiates for the VA, and
I am sure you are familiar with that, or even when the
Government used to negotiate for the Medicaid program. Or you
look at Costco.com, and when people shopped around there, they
often got a better price than these plans are paying.
I am pleased that we have a step in the direction of a drug
plan, but I think it is a flawed one, and I think we should
learn from our experiences to see where we need to change this
program, because the essential point of it is we were going to
hold down drug prices through competition. There is no real
market there. The prices are not being held down. That means
that seniors and the Government taxpayers are overpaying for
drugs.
Mr. JOHNSON OF TEXAS. Well, in my district alone, there are
25 companies offering it, and they are competing against each
other, and the prices are down. Maybe you ought to go back and
take a look at your district again.
Thank you, Mr. Waxman.
Mr. WAXMAN. Thank you. Perhaps you want to look at yours
again, too.
Mr. JOHNSON OF TEXAS. Thank you, Madam Chair.
Chairman JOHNSON OF CONNECTICUT. Mr. Doggett.
Mr. DOGGETT. You know, Mr. Waxman, thank you for your vital
leadership.
As I listen to your description of the way this drug plan
has worked versus the spokespersons for the Bush Administration
yesterday and the opening statement of our Chairwoman, it is
almost as if you were describing two entirely different worlds.
I find that the world you are describing is the one that is
what my seniors throughout Texas have been telling me, what a
pharmacist in Mission, Texas is telling me about the problems
that he encounters, and the very personal experience--my mom is
88 years old and seems to have kind of a pharmacy on her table
when I go by to see her. My daughter, who is a physician, went
to work to try to figure out which plan would work best. If she
had gone with what appeared to be the best plan first, my
mother would have been paying more for prescriptions than the
huge price she was paying before this plan.
Finally, through a lengthy process that eventually involved
consultation with my mother's various physicians, she has what
she thinks is a savings for my mom, and even that may have been
lost now that my mother has been switched to some additional
prescriptions because she has some new problems.
I am confident that we can turn over this entire plan to
sixth graders in Arkansas or Texas or California or Connecticut
to punch in things. In fact, we can turn it over to preschool
kids, and they will get people signed up. Many of them have
more experience with computers than the seniors that I
represent. It does not mean that they are going to get them a
plan that saves them any money or meets their needs and
addresses the problems that you have addressed.
Mr. WAXMAN. Well, Mr. Doggett, I would go to a sixth grader
to learn to use my iPod or my computer, but I would not go to
them to pick out an insurance plan.
Mr. DOGGETT. Well, I am sure that they can pick, but
whether they pick one that will meet the concerns you have and
will lower prices is quite a different question.
My concern has been not only the treatment of our seniors--
I think some of them are being fleeced by this sort of plan--
but that the taxpayer is being fleeced also. You remember the
history that it took a great deal of deception from the Bush
Administration, hiding the true numbers of the cost of this
legislation, most of all from some of the Republicans who ended
up voting it in the middle of the night when the rules were
twisted here, and we were here all night long to force through
this bill through the House.
Now, the fact that the Government is prohibited from
negotiating on behalf of Medicare beneficiaries the way it does
for our veterans through the VA means that ultimately, not only
the seniors, but the taxpayers have to pay more.
Now, I raised this concern yesterday with Dr. McClellan,
and he questioned the study that you have done that you
reported on today, and though he said the VA program was great
for veterans, he was unwilling to apply this same approach to
help our seniors and to help American taxpayers get more cost
benefit for their tax dollar. I just wonder if you might--I
think you are familiar with this criticism of your average
wholesale price analysis, if you might have any response to
those criticisms of what I thought was a very important study
that you and your staff have provided.
Mr. WAXMAN. The bottom line is that the survey by my staff
showed that the Medicare plans were unable to adequately retain
low prices for seniors. It is absurd that in the first few
months of the program, prices went up 4 percent. Drug plans
should not be allowed to increase prices on consumers after
they sign up for the plan. They should not be allowed to pull a
bait and switch on the consumers. It is good that they now are
supposed to keep the drug on the formulary once someone is
using it, but they should not allow the price to go up, and
they certainly still allow that.
Medicare price increases are likely to continue. The latest
estimate by CMS actuaries shows that they expect drug price
increases under Medicare plans to be higher than the inflation
rate for the next decade. Well, that is going to affect all
seniors. The price increases reduce their purchasing power.
They will use up their benefits, and they will enter the
doughnut hole much faster than anticipated.
The statements by CMS yesterday were incorrect. My staff
found that Medicare plan prices were going up faster than other
benchmarks, but CMS said, well, not over the average wholesale
price. If you look at the Canadian prices and other benchmarks,
it is just clearly going up faster.
Mr. DOGGETT. Finally, you performed a great service in
requesting this Government Accountability Office (GAO) study of
the bureaucracy that is administering this complex plan. I
think that showed that on the most important question of what
is the best plan for you in terms of lowest cost that CMS was
advising either incompletely, inaccurately, or no answer at all
60 percent of the time.
Mr. WAXMAN. Well, they not only gave inaccurate information
to seniors, but they gave them to sixth graders who were
advising the seniors.
[Laughter.]
Mr. WAXMAN. That makes me angry.
Mr. DOGGETT. Thank you.
Mr. WAXMAN. Thank you.
Chairman JOHNSON OF CONNECTICUT. Mr. Ramstad.
Mr. RAMSTAD. Thank you, Madam Chairman.
You know, I have been here 16 years, and I really tried to
work in a bipartisan, pragmatic way on issues. It is really
disappointing to see--I understand politics. I have been around
that world a long time. To politicize, as some are doing--I am
not referring to the witness nor to any of my colleagues
necessarily, but I think to politicize the most important
expansion of Medicare, the biggest entitlement since the Great
Society programs I think is really unfortunate, and I think it
does a disservice to this institution.
It is one thing to be critical of the program or the
rollout. We can all be critical of the way dual eligibles were
mishandled at the beginning, and I think corrections have been
made. I think to cast it in political terms, Republicans versus
Democrats, is really unfortunate. I hope we can get away from
that and work more in a bipartisan way to see this program
implemented so that it does benefit the seniors of America.
We are going to hear later from a witness, the Vice
President of Ovations, which is a business unit of United
Health Group, the only company, by the way, to currently offer
the new Medicare prescription drug benefit in all 50 States and
the District of Columbia. Since January 1, they have processed
over 50 million prescription drug claims with beneficiaries
yielding savings consistent--I am reading from their testimony
now--consistent with CMS' estimate; $1,100 per year, the
average beneficiary is saving, that is, beneficiaries who,
prior to the benefit, lacked prescription drug coverage, had no
prescription drug coverage.
So, I think we have to recognize the pluses of this
program, and I know that you have said, Mr. Waxman, previously,
that the Government should implement a standard benefit--and
this is a reasonable position--you said the Government should
implement a standard benefit, with the premiums set at $35 a
month. Well, the latest estimates of the average premiums are
$25 a month under Part D.
Do you want to raise seniors' premiums? Is that what the
$35 figure suggests that you----
Mr. WAXMAN. No, I want a standard benefit. There is no
guarantee that those premiums are going to stay low. They can
go up much higher next year. Low premiums this year could be an
enticement to get people to sign up in a plan by saying, oh, we
are going to have a low premium for you.
Look: you are right. We have got what we have got, and I
think the fair thing for people to do is to look at the facts.
There are problems with this drug benefit. There are positive
parts of it as well, but there are problems. For our colleagues
to say what a great success it is is just not credible, because
it is not a great success when we are hearing so many
complaints and so many problems, partly from the rollout and
quite a bit, I think, because of the way the whole program has
been structured.
Mr. RAMSTAD. Well, I could take my remaining time and tell
you of my constituents' success stories, those who have
benefited significantly from it, people who were previously
uninsured, and literally, as we have said around here many
times, had to choose at the end of the month between putting
food on the table and buying their necessary prescription
drugs.
Mr. WAXMAN. That is why we need a drug plan, but let me
just----
Mr. RAMSTAD. The low-income seniors have certainly
benefited the most. That cannot be denied. Also, when I hear
how drug costs have increased, it just does not--the empirical
data suggests that the top 20 drugs have all--the costs have
come down as a result of this drug benefit, and we can show you
that empirical data, so I think----
Mr. WAXMAN. I do not think you will be able----
Mr. RAMSTAD [continuing]. facts are stubborn things, and we
are all entitled to our own opinions but not to our own facts.
Mr. WAXMAN. Right, that is why I do not think you will be
able to establish that. I think you will see that the prices
have gone up.
Mr. RAMSTAD. I will be glad to meet with you and share with
you those figures.
Mr. WAXMAN. I also want to point out that CMS' own
actuaries say that the premiums are going to increase by 28
percent, to $32 next year. Well, plans can choose to go lower
or higher. There is just no way to know what they are going to
do. They are going to be under a lot of pressure unless they
can hold down the price of drugs, and that is something we want
them to be able to do.
Mr. RAMSTAD. Well, I certainly concur with that, and that
is a key variable and a crucial variable. There is no question
about that.
Well, with that, I appreciate your being here, Mr. Waxman,
and yield back the balance of my time.
Chairman JOHNSON OF CONNECTICUT. Mr. English.
Mr. ENGLISH. Madam Chair, thank you for the offer of time,
but I think I will yield back in order to allow this proceeding
to move to its inevitable conclusion.
[Laughter.]
Chairman JOHNSON OF CONNECTICUT. Would the gentleman yield,
Mr. English? If you are not going to use your time, there are a
couple of things I did want to just put in the record.
Mr. ENGLISH. I would be delighted to yield.
Chairman JOHNSON OF CONNECTICUT. I do want to put in the
record the fact that your study uses average wholesale prices,
does it not?
Mr. WAXMAN. That is one of the benchmarks, but it also uses
the Canadian prices, the VA prices, and the Drugstore.com
prices. So, we have a number of benchmarks.
Chairman JOHNSON OF CONNECTICUT. I would just point out
that the average wholesale prices are so irrelevant to the
actual price of drugs that we have moved away from those to
other kinds of pricing mechanisms to try to judge market prices
and also by excluding----
Mr. WAXMAN. Well, we did not use it. That was the CMS
criticism of it.
Chairman JOHNSON OF CONNECTICUT. Also, by excluding
generics, you do not give anywhere near an accurate picture,
because more than half of the prescriptions that seniors use
are generics. Then, when you extol the VA, you sort of ignore
the fact that 20 of the 33 prescription drugs that seniors most
commonly use are not on the VA's formulary. Part of their low
price structure is their limited formula range.
So, I wanted to put those facts on the table, but I will
now recognize J.D. from Arizona.
Mr. HAYWORTH. Madam Chairman, if I could yield to my good
friend from Missouri.
Chairman JOHNSON OF CONNECTICUT. Fine.
Mr. Hulshof from Missouri.
Mr. HULSHOF. Henry, if you will allow me to be so familiar.
Mr. WAXMAN. Kenny, do you want to have a beer and discuss
this?
Mr. HULSHOF. Well, maybe we should. Actually, maybe we
should adjourn and head down to, well, I probably should not
name one of the lounges. I am obviously looking at my staff for
guidance here as to where a local lounge would be.
[Laughter.]
Mr. WAXMAN. Well, we have our gym time coming up.
Mr. HULSHOF. In fact, here is the point, and I want to echo
what my friend Jim Ramstad had to say. Somewhere in that answer
to him, you acknowledged some positives. I think that is where,
when I hear some of the incendiary rhetoric from some, I think
we are talking past one another. Because we acknowledge--I will
speak for myself; I acknowledge, as I did yesterday, there have
been glitches. We have dealt with early on some complaints from
senior citizens. We have tried to help walk them through. We
have focused them to--we have a very good Division of Aging
back in Missouri who has helped sign folks up.
I just wish there were more of an honest discussion about
and acknowledgement that there are pluses and minuses, and so,
that is an editorial comment you do not need to address.
I do want to mention one thing. Your critique of CMS, one
of the critiques that you mentioned was that they include both
brand names and generics in these positive numbers, and that is
a criticism or a critique that you have made. Yet, you praised
the VA for its formulary, and in fact, the VA formulary is
predominantly generic and some brand name.
I point out that on the one hand, there is a critique
because both brand name and generics are included, and yet,
there is a lot of praise for the VA formulary when, in fact, it
is more heavily tilted toward the generic. In fact, 20 of the
top 33 drugs by seniors are not on the VA formulary.
The other concern I have as far as any sort of movement
toward the VA, in Missouri, we have five VA pharmacies. We have
1,084 regular pharmacies. So, that is a concern.
Mr. WAXMAN. Can I just clarify?
Mr. HULSHOF. Sure, I will yield to you.
Mr. WAXMAN. I certainly want generic drugs to be
substituted. They are the same drug as the brand name drug, and
they should be substituted. We are not talking about trying to
discourage the use of generics.
When they took brand name drugs and generics and put them
together to show they were getting lower prices, it ignored the
fact that 90 percent of the cost of the drugs for seniors is
the brand name drugs. So, we have to look at the reductions in
the prices of the drugs that cost the most.
The VA, for example, the VA does not restrict people's
access to whatever drug they need. They encourage the generics,
as they should, when there is one, but they do not deny, nor
did Medicaid, but they do not deny access to the brand name
drug you need when a generic is not available. We want that
available to people. Yet, they were able to hold the prices
down, because they use the buying clout of the veterans to
negotiate a lower price.
My problem is that we have foregone that, and I think that
already, we are seeing this claim of a market holding down
prices not working. If it does not work, then, we are going to
have to look for some other alternatives.
Mr. HULSHOF. Well, the other side of the VA equation is
that nonformulary prescriptions are approved by the VA only
when the patient meets one of six very narrow tests, whether
there is a contradiction to formulary drugs, adverse reaction,
therapeutic failure, no formulary alternative exists, and
number of these other areas.
Let me move on in the interests of time, and we have other
witnesses coming. We can discuss and debate the CMS critique
that you have, and yet, I think you also quoted the Medicare
Trustees' Report, which came out earlier this week, and quite
frankly, the Trustees' Report essentially says that program
costs are down 20 percent; 15 percent of that savings is due to
lower drug costs; and 5 percent savings due to plans, private
plans, negotiating aggressively.
So, again, I do not want to talk past you, but I would hope
that it is easy when you are back home, and if I wanted to have
a town meeting, and I wanted to talk about ethanol, and I send
a letter out to all the corn farmer constituent friends that I
have, obviously, we are going to have a very pro-ethanol
meeting, and if I have been talking about a flawed program and
confusing scheme, and if I have been vehemently opposed to a
prescription drug benefit, and if I wanted to call a town
meeting and send out a mailing, of course, I am going to have
people who are quite critical of the program.
Again, that is not a comment on you or any of your
testimony, and I appreciate your prejudice.
Mr. WAXMAN. Well, that is a good point that you make. In
other words, you are saying if we are criticizing the plan at a
town meeting, people will get a negative view of it. I do not
think they really need us to criticize it for them to get that
negative view, because they feel they were promised a drug
benefit under Medicare, like they get doctors paid by Medicare,
they get the hospitals, they get the physical therapists all
paid. It is a benefit, and it is covered.
I think it is as if you went in to buy a Lexus, and they
gave you a clunker. It is better to have a clunker than
nothing, but you feel a little let down that you did not get
what you thought you were being promised.
Chairman JOHNSON OF CONNECTICUT. Mr. Rangel.
Mr. RANGEL. Thank you so much for the courtesy, Madam
Chairlady.
When you inquired of Mr. Waxman of the number of people who
had enrolled into this program and said it was 68, I was amazed
at that number based on how bad I am doing in my district, so I
asked staff to see whether they could get from CMS the same
type of material and found out they had 76 for my district.
So, then, I read it further, and I find out that not only
do I have 76, but they expect to increase that to 107 percent.
In some districts, they expected 112 percent. So, knowing that
meant the numbers were padded, I just want to figure out how
did they get the 76 percent? Being honest, as the
Administration normally is, they included all sources, which
meant that anybody who had any coverage of any kind, including
retirees or those that are dual beneficiaries that were forced
to go into the program because it was Medicaid, they were
pushed into this.
So, in fact, this number has very little to do with those
who have enrolled. It means those who have coverage. Then,
looking up here, it really said that: Medicare beneficiaries
with prescription drugs coverage, which has absolutely nothing
to do with the prescription drug program that is Part D. So, I
know the staff probably overlooked that, but I just wanted
Henry to know things are not any better than you thought they
were.
Mr. WAXMAN. Mr. Rangel, if I could say something about
Medicaid, which is in the jurisdiction of the Energy and
Commerce Committee----
Mr. RANGEL. Oh.
Mr. WAXMAN. Used to be in your jurisdiction, and who knows
what the future will be?
The fact of the matter is the people under Medicaid had--
they knew they got their drugs covered. It was being paid for
under the Medicaid program, and it was also being paid for at
the lowest price, because the States and the Federal Government
negotiated and got that lower price. They insisted on the best
price; there were rebates.
So, we took them away from the Medicaid programs and
shifted it over to Medicare. So, we do not have those
negotiated lower prices anymore. So, we are paying more for the
Medicaid and Medicare dual eligibles, for their drugs, and they
have less of a certainty that their drugs are even going to be
covered.
That cannot be a good deal. Now, I do not want to be only
negative about it, but that is not a good deal. If you think
about it for a minute, if you are somebody who needs a certain
drug, and you check with a 6-year-old or sixth-grader, and the
sixth-grader says that your drug for high blood pressure, or
let us say it is an antipsychotic drug is on the formulary, and
you sign up with that drug plan to be sure you get that drug,
and then, after you sign up, they tell you, oh, by the way, you
cannot get that drug; you have to use another drug. Then, if
that drug does not work therapeutically, then, you could step
up.
Well, they have already gone through this. To tell
somebody, let us say, who needs an antipsychotic drug that they
cannot get the one that is working for them any longer, you
could see how angry they could be, not just because they did
not have their drugs to calm them down.
[Laughter.]
Mr. WAXMAN. They would be angry because they thought they
were signing up in a plan that was going to give them the drug.
So, anyway, I think there are real problems in this. We
ought to be mindful, all of us, Democrats and Republicans, of
what is working and what is not and then address the problems
where the program is not working, because we owe it to the
American people to do better.
Mr. RANGEL. Well, even though the Medicaid people are
paying more under the Part D, and even though the dual
beneficiaries pay more than they would normally pay, at least
you know that they should be on it; that they are included as
new enrollees in the plan.
Mr. WAXMAN. Well, we are paying more for them, because
Medicaid beneficiaries do not pay those co-pays.
Mr. RANGEL. Based on your experience, could you give us one
reason why the Government would not want Medicare to be able to
negotiate the same way the VA does? To what advantage would be
to the taxpayer and to the beneficiaries not to be able to
negotiate and to get the lowest possible price?
Mr. WAXMAN. Every insurance plan that covers
pharmaceuticals negotiates for better prices using their buying
clout. What we have done is lost the opportunity to have the
Government negotiate those better prices. The only thing I can
say in answer to you is that some people believed in this
market theory. They think it is going to work, and I do not
think it is going to work. The second reason is that the
pharmaceutical companies did not want Medicare negotiating,
because they were going to have to take less money, and there
were a lot of people who did not want to disappoint the
pharmaceutical companies.
In fact, two of the people involved in the negotiation of
the Medicare bill went off to work for the pharmaceutical
companies. So, I think for those two reasons, I think it is
unfortunate that we gave up the ability of the Government to
negotiate good prices for the buying clout of seniors.
Mr. RANGEL. There is a clear implication that the Congress,
at least that part that controlled the Congress, wanted to do
what was best for the pharmaceuticals rather than the
beneficiaries.
Mr. WAXMAN. Sad.
Mr. RANGEL. Thank you, Madam Chairlady.
Chairman JOHNSON OF CONNECTICUT. You are welcome.
Given that people who have planes to catch, we are going to
move on to the next panel, but Henry, since you are on the
Commerce Committee and an advocate of the best price laws to
give Medicaid the best price, you should be aware of testimony
we had yesterday from a national insurer saying that they had
been able to negotiate prices below the best prices in the
State, because we in the Medicare law allowed the circumvention
of that.
So, the prices are very low. You can see that in the State
payment programs. They are going to make more on this program
than they anticipated, because their prices were higher than
ours, and so, there are many ways in which everybody is going
to benefit, and it is too bad that we cannot go back and forth
about the details, but we do have another panel, and we need to
get on to them.
Mr. WAXMAN. Nancy, put me down as skeptical, because even
the drug companies have suggested their prices are going to be
higher. We will disagree on that.
Chairman JOHNSON OF CONNECTICUT. Well, I see in your other
statements that you are not out there saying that your members
should not sign up. Your members should sign up, and you have
said that very clearly.
Mr. WAXMAN. Also, we ought to extend the deadline.
Chairman JOHNSON OF CONNECTICUT. Thank you.
Chairman JOHNSON OF CONNECTICUT. Next panel.
As the next panel gathers, since for most of you, your
testimony was in the record yesterday as you submitted it,
would you please focus on any additions to that this, so
hopefully, we can get through your testimony before Members
have to leave to catch their planes?
We have with us on this next panel, we have Leslie
Aronovitz of the GAO; Vicki Gottlich of the Center for Medicare
Advocacy; Mark Steinberg, Senior Health Policy Analyst at
Families, USA; and Joyce Larkin, Vice President, Public Affairs
and Community Relations at Ovations of United Health Group; and
Bill Vaughan, Senior Policy Analyst at Consumers Union.
We will start with Leslie Aronovitz.
STATEMENT OF LESLIE ARONOVITZ, U.S. GOVERNMENT ACCOUNTABILITY
OFFICE
Ms. ARONOVITZ. Thank you, Madam Chairman and Members of the
Subcommittee. I am pleased to be here today as you discuss the
Centers for Medicare and Medicaid Services' implementation of
the Medicare Part D outpatient drug benefit.
Given the newness and complexity of the Part D benefit, it
is critical that beneficiaries and those who advise them on
health care decisions understand how Part D works and the
options available. As part of its responsibilities, CMS
provides beneficiaries and their advisors with information
about Part D through various media, including written
documents, the 1-800-Medicare help line, and the Medicare
Website.
In our report released yesterday, we evaluated the
readability of a sample of CMS' written documents, the accuracy
and responsiveness of CMS' 1-800-Medicare help line, and the
usability of the Part D portion of CMS's Medicare Website.
In summary, the written documents we reviewed were largely
complete and accurate, but the way the information was
presented made comprehension difficult. According to our
contractor that has expertise in preparing written materials
for seniors, about 40 percent of seniors read at or below the
fifth grade level. However, we found that the reading levels
for our sample documents ranged from seventh grade to post
college, and once adjusted for words that CMS cannot replace
with easier words, it still ranged from about eighth grade to
twelfth grade level.
Also, on average, we found that the six documents did not
comply with about half of the commonly recognized guidelines
for good communications. For example, although the documents
included concise and descriptive headings, they used too much
technical jargon and often did not define difficult terms.
In regard to the 500 calls we made to CMS' 1-800-Medicare
help line, 67 percent of the calls were answered accurately and
completely; 3 percent were answered incompletely; 18 percent
inaccurately; and 8 percent were answered inappropriately given
the question that was asked, and I can elaborate on that later.
Five percent of our calls were not answered, primarily because
we were disconnected.
I would like to note that these accuracy and completeness
rates varied significantly across the questions we asked. For
example, for the question on whether a beneficiary qualifies
for extra help, customer service representatives (CSRs)
provided an accurate and complete response 90 percent of the
time. The correct answer would have been to call the Social
Security Administration to find out about extra help.
However, for a question concerning which drug plan is the
least costly for a beneficiary with certain specified
prescription drug needs, the accuracy rate was 41 percent. In
35 percent of our calls for that question, CSRs inappropriately
responded that this question could not be answered without
personal identifying information, such as the beneficiary's
Medicare number or date of birth, even though some CSRs
answered our questions using CMS' Web-based prescription drug
plan finder tool, which was the appropriate tool to use.
Sometimes, we experienced extensive wait times before we
could speak to a CSR. For 75 percent of the 477 calls where we
reached a CSR--23, we did not, because we were disconnected--we
waited less than 5 minutes. So, most of the time, we waited
less than 5 minutes. Thirteen percent of the time, the calls
were answered in between 5 and 15 minutes; 8 percent of the
time, they were answered in 15 to 25 minutes; and about 5
percent of the time, we waited more than 25 minutes.
Finally, in regard to the Medicare Website, we engaged a
contractor with expertise in evaluating Websites, including
those used by seniors. We concluded that the Part D portion of
Medicare.gov can be difficult for some to navigate. In overall
usability tests, the site scored 47 percent for seniors and 53
percent for younger adults. Use of tools such as the Drug Plan
Finder was daunting, and online forms that collect information
from users were difficult to correct if the user made an error.
Further, in the evaluation of 137 detailed aspects of a
Website, we found that 70 percent of these aspects could be
expected to cause users confusion. For example, key functions
of the drug plan finder tool, such as the continue button or
the choose a drug plan button, were often not visible on the
screen unless you scrolled down.
Chairman JOHNSON OF CONNECTICUT. Would you suspend for a
moment?
Ms. ARONOVITZ. Sure.
Chairman JOHNSON OF CONNECTICUT. I forgot to remind the
witnesses that we do have 5 minutes per witness. You have
reached your 5 minutes, but if you could just wrap up with a
sentence, I am sure that in questions, we will give you an
opportunity to conclude your statement.
Ms. ARONOVITZ. I would be happy to.
Chairman JOHNSON OF CONNECTICUT. Because people have planes
to catch, I do want to observe the five-minute rule on the
podiums as I have for the Members.
Ms. ARONOVITZ. Absolutely.
It should be noted that given the complexity of the benefit
and the time allocated for implementation, CMS did face a
tremendous challenge in developing its communication efforts,
and we look forward to working with CMS as it continues to
refine its communication tools to better serve the public.
This concludes my statement, and I am happy to answer any
questions.
[The prepared statement of Ms. Aronovitz follows:]
Prepared Statement of Leslie Aronovitz, Director for Healthcare,
U.S. Government Accountability Office
Mr. Chairman and Members of the Subcommittee:
I am pleased to be here today as you discuss the Medicare
outpatient prescription drug benefit, known as the Part D benefit,
which was established by the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 \1\ with coverage beginning on January 1,
2006. Until this time, Medicare, the program that finances health care
benefits for about 42 million elderly and disabled beneficiaries, had
not generally provided coverage for outpatient prescription drugs.
Beneficiaries who opt to enroll in Part D may choose a drug plan from
those offered by private plan sponsors under contract to the Centers
for Medicare & Medicaid Services (CMS), which administers the Part D
benefit. These plans differ in the drugs covered, pharmacies used, and
enrollee costs. As of April 20, 2006, more than 30 million of
Medicare's 42 million beneficiaries were enrolled in a Part D plan or
had other outpatient prescription drug coverage. Beneficiaries have
until the end of the current enrollment period, May 15, 2006, to enroll
in the Part D benefit and select a plan without the risk of penalties
in the form of higher premiums.
---------------------------------------------------------------------------
\1\ Pub. L. No. 108-173, Sec. 101, 117 Stat. 2066, 2071-2152 (to be
codified at 42 U.S.C. Sec. Sec. 1395w-101--1395w-152). The MMA
redesignated the previous Part D of Title XVIII of the Social Security
Act as Part E and inserted a new Part D after Part C.
---------------------------------------------------------------------------
Given the newness and complexity of the Part D benefit, it is
critical that beneficiaries and their advisers, including members of
their families, understand the options available to them. Understanding
these options enables beneficiaries to make informed decisions on
whether to enroll in the Part D benefit, and if they decide to enroll,
which drug plan to choose. As part of its responsibilities, CMS has
undertaken efforts to provide beneficiaries and their advisers with the
information they need about the Part D benefit through various media,
including written documents, the 1-800-MEDICARE help line,\2\ and the
Medicare Web site.\3\ CMS's education efforts are important because
widespread confusion has been reported among beneficiaries about the
costs and coverage under the new benefit.
---------------------------------------------------------------------------
\2\ In December 2004, we reported on the information being provided
to beneficiaries through the Medicare help line on eligibility,
enrollment, and benefits. See GAO, Medicare: Accuracy of Responses from
the 1-800-MEDICARE Help Line Should Be Improved, GAO-05-130
(Washington, D.C.: Dec. 8, 2004).
\3\ The Medicare Web site is www.medicare.gov.
---------------------------------------------------------------------------
You and others have expressed interest in ensuring that Medicare
beneficiaries receive the information they need to make informed
decisions. My remarks today will focus on (1) the extent to which CMS's
written documents describe the Part D benefit in a clear, complete, and
accurate manner; (2) the effectiveness of CMS's 1-800-MEDICARE help
line in providing accurate, complete, and prompt responses to callers
inquiring about the Part D benefit; and (3) whether CMS's Medicare Web
site presents information on the Part D benefit in a usable manner. My
testimony will summarize findings of a report we released yesterday
that examines CMS's Medicare Part D benefit communications to
beneficiaries in more detail and includes recommendations to the CMS
Administrator for improving the quality of the agency's Part D benefit
education and outreach materials.\4\
---------------------------------------------------------------------------
\4\ GAO, Medicare: Communications to Beneficiaries on the
Prescription Drug Benefit Could Be Improved, GAO-06-654 (Washington,
D.C.: May 3, 2006).
---------------------------------------------------------------------------
To address these issues, we interviewed CMS officials responsible
for written documents about the Part D benefit, the 1-800-MEDICARE help
line, and the Medicare Web site. To assess the clarity, completeness,
and accuracy of written documents, we performed an in-depth review of a
sample of six CMS documents describing the Part D benefit, including
contracting with the American Institutes for Research (AIR), a firm
with experience in evaluating written documents, to assess their
clarity. (See app. I for a list of written documents reviewed.) We also
placed 500 calls to 1-800-MEDICARE, posing one of five questions
related to the Part D benefit in each call so that each question was
asked 100 times. We evaluated the accuracy and completeness of customer
service representatives' (CSR) responses to these questions. (See app.
II for the questions and criteria we used to evaluate the accuracy and
completeness of CSR responses to calls we made to 1-800-MEDICARE.) To
assess the usability of the Part D benefit information available on the
Medicare Web site, we contracted with the Nielsen Norman Group (NN/g),
an expert on Web design. We conducted our work from November 2005
through May 2006, in accordance with generally accepted government
auditing standards.
In summary, CMS successfully developed a large volume of
information about the new Part D benefit and made it available to
beneficiaries through a variety of sources, despite the challenge of
developing this information within a short time frame. However, the
quality of CMS's communications to beneficiaries and their advisers
about the Part D benefit could be improved. For example, although the
six CMS written documents we reviewed were largely accurate and
complete, they often lacked clarity. Specifically, while about 40
percent of seniors read at or below the fifth-grade level, the reading
levels of the documents ranged from seventh grade to postcollege.
Moreover, the six documents used too much technical jargon and often
did not define difficult terms. Similarly, although 67 percent of the
responses to the 500 calls we placed to CMS's 1-800-MEDICARE help line
regarding the Part D benefit were accurate and complete, we nonetheless
received a substantial number of responses that were not. Eighteen
percent of the calls received inaccurate responses, 8 percent of the
responses were inappropriate given the question asked, about 3 percent
received incomplete responses, and about 5 percent of our calls were
not answered, primarily due to disconnections.\5\ In addition, our
review of the Part D benefit portion of the Medicare Web site showed
that this site can be difficult to use. In usability tests that
examined the ease of finding needed information and performing various
tasks, we found that, for overall usability, the Web site scored 47
percent for seniors and 53 percent for younger adults, out of a
possible 100 percent. While there is no widely accepted benchmark for
usability, these scores indicate that using the site can be difficult.
Therefore, in the report we issued yesterday, we made specific
recommendations to the CMS Administrator to enhance the quality of the
agency's communications on the Part D benefit, including clarifying
written materials, monitoring the accuracy and completeness of CSR's
responses to callers' inquiries, and improving the usability of the
Part D benefit portion of the Medicare Web site. In its comments on a
draft of our report (see app. III), CMS said that it supports the goals
of our recommendations and is already taking steps to implement them.
However, CMS said that our findings did not present a complete and
accurate picture of its Part D benefit communications activities. We
believe that our report provides an accurate examination of the CMS
communications mechanisms that have the greatest impact on
beneficiaries (see app. IV).
---------------------------------------------------------------------------
\5\ The percentages related to the responses we received to our 500
calls exceed 100 percent due to rounding.
---------------------------------------------------------------------------
Background
CMS has undertaken steps to educate beneficiaries about the Part D
benefit using written documents, a toll-free help line, and the
Medicare Web site. To explain the Part D benefit to beneficiaries, CMS
had produced more than 70 written documents as of December 2005.
Medicare & You--the beneficiary handbook--is the most widely available
and was sent directly to beneficiaries in October 2005. Other written
documents were targeted to specific groups of beneficiaries, such as
dual-eligible beneficiaries \6\ and beneficiaries with Medicare
Advantage or Medigap policies.\7\
---------------------------------------------------------------------------
\6\ Dual-eligible beneficiaries are Medicare beneficiaries who are
also eligible for Medicaid--the federal-state health program for low-
income individuals--and receive full Medicaid benefits for services not
covered by Medicare.
\7\ Medicare Advantage replaced the Medicare+Choice managed care
program and expanded the availability of private health plan options to
Medicare beneficiaries. Medigap policies provide supplemental health
coverage sold by private insurers to help pay for Medicare cost-sharing
requirements, as well as for some services not provided by Medicare.
---------------------------------------------------------------------------
Beneficiaries can obtain answers to questions about the Part D
benefit by calling the 1-800-MEDICARE help line. This help line, which
is administered by CMS, was established in March 1999 to answer
beneficiaries' questions about the Medicare program. As of December
2005, about 7,500 CSRs were handling calls on the help line, which
operates 24 hours a day, 7 days a week, and is run by two CMS
contractors. CMS provides CSRs with detailed scripts to use in
answering the questions. Call center contractors write the scripts, and
CMS checks them for accuracy and completeness.
In addition, CMS's Medicare Web site provides information about
various aspects of the Medicare program. The Web site contains basic
information about the Part D benefit, suggests factors for
beneficiaries to consider when choosing plans and provides guidance on
enrollment and plan selection. It also lists frequently asked questions
and allows users to view, print, or order publications. In addition,
the site contains information on cost and coverage of individual plans.
There is also a tool that allows beneficiaries to enroll directly in
the plan they have chosen.
Clarity of CMS Written Documents Could Be Improved
Although the six sample documents we reviewed informed readers of
enrollment steps and factors affecting coverage, they lacked clarity in
two ways. First, about 40 percent of seniors read at or below the
fifth-grade level, but the reading levels of the documents ranged from
seventh grade to postcollege. As a result, these documents are
challenging for many seniors. Even after adjusting the text for 26
multisyllabic words, such as Medicare, Medicare Advantage, and Social
Security Administration, the estimated reading level ranged from
seventh to twelfth grade, a reading level that would remain challenging
for at least 40 percent of seniors.
Second, on average, the six documents we reviewed did not comply
with about half of the 60 commonly recognized guidelines for good
communications. For example, although the documents included concise
and descriptive headings, they used too much technical jargon and often
did not define difficult terms such as formulary.\8\ The 11
beneficiaries and 5 advisers we tested reported frustration with the
documents' lack of clarity as they encountered difficulties in
understanding and attempting to complete 18 specified tasks. For
example, none of these beneficiaries and only 2 of the advisers were
able to complete the task of computing their projected total out-of-
pocket costs for a plan that provided Part D standard coverage. Only
one of 18 specified tasks was completed by all beneficiaries and
advisers. Even those who were able to complete a given task expressed
confusion as they worked to comprehend the relevant text.
---------------------------------------------------------------------------
\8\ A formulary is a list of prescription drugs covered by a health
plan.
---------------------------------------------------------------------------
Help Line Responses Frequently Complete and Accurate, but Varied By
Question
Of the 500 calls we placed to CMS's 1-800-MEDICARE help line
regarding the Part D benefit, CSRs answered about 67 percent of the
calls accurately and completely. Of the remainder, 18 percent of the
calls received inaccurate responses, 8 percent of the responses were
inappropriate given the question asked, and about 3 percent received
incomplete responses. In addition, about 5 percent of our calls were
not answered, primarily because of disconnections.\9\
---------------------------------------------------------------------------
\9\ The percentages related to the responses we received to our 500
calls exceed 100 percent because of rounding.
---------------------------------------------------------------------------
The accuracy and completeness of CSR responses varied significantly
across our five questions. (See fig. 1.) For example, while CSRs
provided accurate and complete responses to calls about beneficiaries'
eligibility for financial assistance 90 percent of the time, the
accuracy rate for calls concerning the drug plan that would cost the
least for a beneficiary with specified prescription drug needs was 41
percent. CSRs inappropriately responded 35 percent of the time that
this question could not be answered without personal identifying
information--such as the beneficiary's Medicare number or date of
birth--even though the CSRs could have answered our question using
CMS's Web-based prescription drug plan finder tool. CSRs' failure to
read the correct script also contributed to inaccurate responses. The
time GAO callers waited to speak with CSRs also varied, ranging from no
wait time to over 55 minutes. For 75 percent of the calls--374 of the
500--the wait was less than 5 minutes.
[GRAPHIC] [TIFF OMITTED] T3132A.013
Figure 1: Variation in CSRs' Responses for Individual Questions
Part D Benefit Portion of Medicare Web Site Can Be Challenging to Use
We found that the Part D benefit portion of the Medicare Web site
can be difficult to use. In our evaluation of overall usability--the
ease of finding needed information and performing various tasks--we
found usability scores of 47 percent for seniors and 53 percent for
younger adults, out of a possible 100 percent. While there is no widely
accepted benchmark for usability, these scores indicate difficulties in
using the site. For example, tools such as the drug plan finder were
complicated to use, and forms that collect information on-line from
users were difficult to correct if the user made an error.
We also evaluated the usability of 137 detailed aspects of the Part
D benefit portion of the site, including features of Web design and on-
line tools, and found that 70 percent of these aspects could be
expected to cause users confusion. For example, key functions of the
prescription drug plan finder tool, such as the ``continue'' and
``choose a drug plan'' buttons, were often not visible on the page
without scrolling down. In addition, the drug plan finder tool
defaults--or is automatically reset--to generic drugs, which may
complicate users' search for drug plans covering brand name drugs. The
material in this portion of the Web site is written at the 11th grade
level, which can also present challenges to some users. Finally, in our
evaluation of the ability of seven participants to collectively
complete 34 user tests, we found that on average, participants were
only able to proceed slightly more than half way though each test. When
asked about their experiences with using the Web site, the seven
participants, on average, indicated high levels of frustration and low
levels of satisfaction.
Concluding Observations
Within the past 6 months, millions of Medicare beneficiaries have
been making important decisions about their prescription drug coverage
and have needed access to information about the new Part D benefit to
make appropriate choices. CMS faced a tremendous challenge in
responding to this need and, within short time frames, developed a
range of outreach and educational materials to inform beneficiaries and
their advisers about the Part D benefit. To disseminate these
materials, CMS largely added information to existing resources,
including written documents, such as Medicare & You; the 1-800-MEDICARE
help line; and the Medicare Web site. However, CMS has not ensured that
its communications to beneficiaries and their advisers are provided in
a manner that is consistently clear, complete, accurate, and usable.
Although the initial enrollment period for the Part D benefit will end
on May 15, 2006, CMS will continue to play a pivotal role in providing
beneficiaries with information about the drug benefit in the future.
The recommendations we have made would help CMS to ensure that
beneficiaries and their advisers are prepared when deciding whether to
enroll in the benefit, and if enrolling, which drug plan to choose.
Mr. Chairman, this concludes my prepared remarks. I would be happy
to respond to any questions that you or other Members of the
subcommittee may have at this time.
__________
Appendix I: Sample of CMS Written Documents Reviewed
To assess the clarity, completeness, and accuracy of written
documents, we compiled a list of all available CMS-issued Part D
benefit publications intended to inform beneficiaries and their
advisers and selected a sample of 6 from the 70 CMS documents
available, as of December 7, 2005, for in-depth review, as shown in
Table 1. The sample documents were chosen to represent a variety of
publication types, such as frequently asked questions and fact sheets
available to beneficiaries about the Part D benefit. We selected
documents that targeted all beneficiaries or those with unique drug
coverage concerns, such as dual-eligibles and beneficiaries with
Medigap plans.
Table 1: Sample of Six Selected Documents
------------------------------------------------------------------------
Document Target audience
------------------------------------------------------------------------
Medicare & You, Section 6: Medicare All beneficiaries
Prescription Drug Coverage
------------------------------------------------------------------------
Things to Think about When You Compare All beneficiaries
Plans
------------------------------------------------------------------------
Frequently Asked Questions about: Beneficiaries with employer or
Retiree Prescription Drug Coverage & union coverage
the New Medicare Prescription Drug
Coverage
------------------------------------------------------------------------
Introduction to the Auto-Enrollment Dual-eligible beneficiaries a
Notice
------------------------------------------------------------------------
Quick Facts about Medicare's New Beneficiaries with Medicare
Coverage for Prescription Drugs for Advantage b
People with a Medicare Health Plan with
Prescription Drug Coverage
------------------------------------------------------------------------
Do You Have a Medigap Policy with Beneficiaries with Medigap c
Prescription Drug Coverage?
------------------------------------------------------------------------
Source: GAO.
a Dual-eligible beneficiaries are Medicare beneficiaries who receive
full Medicaid benefits for services not covered by Medicare.
b Medicare Advantage replaced the Medicare + Choice managed care program
and expanded the availability of private health plan options to
Medicare beneficiaries.
c Medigap policies provide supplemental health coverage sold by private
insurers to help pay for Medicare cost-sharing requirements, as well
as for some services not provided by Medicare.
__________
Appendix II: Questions and Criteria Used to Evaluate Accuracy and
Completeness of CSR's Help Line Responses
To determine the accuracy and completeness of information provided
regarding the Part D benefit, we placed a total of 500 calls to the 1-
800-MEDICARE help line. We posed one of five questions about the Part D
benefit in each call, so that each question was asked 100 times. Table
2 summarizes the questions we asked and the criteria we used to
evaluate the accuracy of responses.
Table 2: Questions and Criteria Used to Evaluate Accuracy and
Completeness
------------------------------------------------------------------------
Criteria GAO used to evaluate
Question GAO Asked MEDICARE help accuracy and completeness of CSR
line CSRs Responses
------------------------------------------------------------------------
1. What drug plan can a beneficiary An accurate and complete response
get that will cover all of his/her would identify the prescription
[specified] drugs at a [specified] drug plan that has the lowest
pharmacy, have a mail-order estimated annual cost for the
option; and cost the least amount drugs the beneficiary uses.
annually with [or without] a
deductible?
------------------------------------------------------------------------
2. Can a beneficiary who is in a An accurate and complete response
nursing home and not on Medicaid would indicate that a beneficiary
sign up for a prescription drug can choose whether to enroll in a
plan? Medicare prescription drug plan.
------------------------------------------------------------------------
3. Can a beneficiary enroll in the An accurate and complete response
Medicare prescription drug program would inform the caller that
and keep his/her current Medigap enrolling for the prescription
policy? drug benefit would depend on
whether the beneficiary's Medigap
plan was creditable--that is,
whether the coverage it provided
was at least as good as Medicare's
standard prescription drug
coverage--or noncreditable. The
CSR response would also mention
that the beneficiary's Medigap
plan should have sent him/her
information that outlined options.
------------------------------------------------------------------------
4. What options does a beneficiary, An accurate and complete response
who has retiree health insurance would indicate that a beneficiary
with prescription drug coverage has two options: (1) keep current
that is not as good as the health plan and join the
Medicare prescription drug prescription drug plan later with
coverage, have as it relates to a penalty, or (2) drop current
the Medicare benefit? coverage and join a Medicare drug
plan.
------------------------------------------------------------------------
5. How do I know if a beneficiary An accurate and complete response
qualifies for financial would refer the beneficiary to the
assistance? Social Security Administration.
------------------------------------------------------------------------
Source: GAO.
__________
Appendix III: Comments from the Centers for
Medicare & Medicaid's Services
DATE: May 1, 2006
TO: Leslie G. Aronovitz
Director, Health Care
FROM: Mark B. McClellan, M.D., Ph.D.
Administrator
SUBJECT: Government Accountability Office's (GAO) Draft
report, ``MEDICARE: Communications to the
Beneficiaries on the Prescription Drug
Benefit Could Be Improved'' (GAO-06-654)
The Centers for Medicare & Medicaid Services has reviewed the
findings in the GAO report entitled MEDICARE: Communications to
Beneficiaries on the Prescription Drug Benefit Could Be Improved (GAO-
06-654) regarding CMS communications on the Part D benefit. Having
clear and effective communication about Medicare's new prescription
drug coverage is one of the Agency's critical priorities. We have
worked very hard to ensure that Medicare beneficiaries have the
information they need to make decisions about enrolling in a drug plan
that works for them. We are pleased that the millions of beneficiaries
who have enrolled in Part D are experiencing very high rates of
satisfaction with their coverage. Each week, tens of thousands of
beneficiaries are enrolling in Part D, which gives them real savings
and protections for the future.
While we greatly appreciate the feedback from your report and have
already worked to implement your recommendations, we do not believe
that your findings present a complete or accurate picture of the Part D
communication activities. We understand that the report is based on
studies of particular aspects of some of our communications tools at
one point in time three months ago, in January and early February 2006.
In addition to the many ``continuous improvement'' activities we have
undertaken to address startup issues in the drug benefit since that
time, there are much more extensive internal and external evaluations
of our communications activities completed before, during, and after
that time which have different conclusions, as we note below. These
evaluations have used well-established methods which have been clearly
documented and reviewed; in contrast, you have not yet responded to our
requests for information on the methods you have applied. Additionally,
your report does not address the unique breadth and depth of CMS
activities to educate and to reach out to people with Medicare and the
community that supports them in their health care decisions. From the
outset, it was clear that no single source of information would be
adequate or preferred by all of our beneficiaries. Consequently, we
have expanded the range of tools available and vastly expanded our
local partnerships to help beneficiaries use them, partnering with more
than ten thousand diverse public and private organizations around the
country in this effort.
Importantly, the report does not look at this broad array of
communication tools to help Medicare beneficiaries consider their drug
plan options. For example, the report dismisses all of the tools used
by our customer service representatives and our website for
beneficiaries that provide personalized identifying information to
enable us to provide them with personally customized service. The vast
majority of our callers provide such personal identification, yet these
tools were not evaluated. In fact, the report misleadingly states that
we provided the right information on a lower share of cases because
some customer service representatives sought to get this personal
information to serve the beneficiary more quickly and effectively.
Where GAO did actually get information on drug costs, as thousands of
callers get every day, customer service representatives provided
accurate information at a much higher rate. As another example, GAO
evaluated whether beneficiaries could calculate their out-of-pocket
drug costs in the standard Medicare benefit by hand, using only the
Medicare and You handbook, but very few beneficiaries have opted to use
the handbook in this way because: (1) there are far better tools
available for quickly and automatically calculating drug costs on the
web, on the phone, and through our partner organizations, and (2) over
90 percent of our beneficiaries are choosing plans with benefits other
than the standard plan, because they prefer features like zero
deductibles, flat copays, and coverage in the ``donut hole.''
Beneficiaries are overwhelmingly using other tools to make effective
cost comparisons.
In fact, the drug plan finder element of the website has received
164.6 million page views between November 15, 2005 and April 26, 2006.
The Frequently Asked Questions (FAQ) section of www.medicare.gov has
been accessed more than one million times since January 1, 2006. CMS
has also responded to more than 19,000 emails received through the FAQ
section, with 93% of them being resolved satisfactorily in the first
response.
Finally, there is no attention in the report at all to major
aspects of our communications activities and expenditures, such as the
expansion of our community based education and outreach efforts through
an extensive network of grassroots partners across the country. This
significant emphasis on reaching people where they live, work, play and
pray is a key component of our success in reaching millions of people
with Medicare and those who work on their behalf. No mention is made of
the specialized campaigns targeting African American, Hispanic,
American Indians, Asian American and Pacific Islander and in low income
communities. These campaigns utilize new partnerships, employ materials
in other languages and specialized paid media campaigns. These targeted
campaigns within the broader campaign allow us to reach all segments of
the Medicare population, including those who might benefit from the low
income subsidy and those with language and other cultural barriers to
accessing information.
We believe that there have been a number of key elements to our
successful education campaign. First, we recognized early on that we
would need to supplement our proven traditional communications tools,
including the Medicare & You Handbook, the 1-800-MEDICARE line, and the
State Health Insurance Assistance Programs (SHIPs) with additional
advanced technology and grassroots resources, as well as use earned and
paid media opportunities. Second, we determined that the provision of
personalized assistance and one-on-one counseling was the key
ingredient to success. This necessitated our building a grassroots
network of traditional and non-traditional partners who were willing to
be trained to provide the one-on-one counseling. We strongly believe
this is important for beneficiaries to make confident decisions about
their Part D plan. We knew we would have to develop a grassroots
capacity and local networks to supplement the CMS regional structure to
provide the necessary education and enrollment assistance at the
community level. This would involve reaching out, not just to our
traditional partners such as the SHIPs, but to all the groups and
organizations that have contact with our beneficiaries on a daily basis
``where they work, where they play, and where they pray.''
We appreciate any and all ideas for improving our communications
efforts, and we take very seriously the four tasks that GAO recommends
to improve CMS' education efforts. We support the goal of these tasks
and have already taken many steps to meet them.
Ensure that CMS's written documents describe the Part D benefit in
a manner that is consistent with commonly recognized communications
guidelines and that is responsive to the intended audience needs.--CMS
employs a wide variety of consumer research techniques, simple language
best practices, and independent evaluations in both English and in
Spanish documents to ensure the readability and usefulness of our
educational materials including those describing Part D. These tests
have demonstrated that CMS written documents follow best practice
guidelines for written communications with the intended audiences.
These techniques and practices are summarized in Attachment A. Because
of the importance of this topic, we are always interested in improving
our written products. We look forward to an opportunity to review what
GAO used in its review and will compare them to the evaluation methods
we are already using, as soon as GAO is willing to provide the
methodological details.
Determine why CSRs frequently do not search for available drug
plans if the caller does not provide personal identifying
information.--As discussed with the GAO reviewers, CMS has instructed
CSRs, in cases where that information is unavailable, to perform a
search that provides general information on the plan options available
to the beneficiary. Our web tools have always been set up to support
such ``unauthenticated'' searches as well.
1-800 MEDICARE CSRs do have the ability to conduct a general search
for callers who do not have their Medicare number. If the person
provides personal information, the authenticated search, other
information that may influence their decision is pulled into the
search, e.g., low income subsidy status or coverage through a retiree
drug subsidy. Because this path provides more robust and specific
results, CMS has encouraged CSRs to stress the importance of an
authenticated Prescription Drug Plan Finder search to callers. The
importance of authenticated searches is stressed in the CSR training
materials and scripts. We have placed warnings throughout the training
materials about the downside of proceeding without the personalized
information and CSRs do suggest that the person call back when they
have it.
Even so, we know that there are occasions in which someone may not
want to provide this information, or another caller may be inquiring on
behalf of a beneficiary and not have the information, or a reporter or
analyst may be calling for information. It has been emphasized to CSRs
that non-authenticated general information is to be shared if the
caller is unable to provide specific information that would enable a
more detailed search. An example of relevant CSR instructions follows.
``If a caller indicates they are calling for someone else and just
wants general information on plans available in their area, you do not
need to personalize the search if the caller does not want to. You can
provide general plan information and send a personalized booklet if
requested.'' CMS has a comprehensive quality review process on calls
and we will continue to monitor calls to ensure that CSRs are pursuing
the general search when appropriate.
At the same time, we believe that GAO presents this finding in a
way that is incorrect and misleading. We believe that the 41% accuracy
rate unfairly portrayed how accurately CMS answers questions on drug
plan options without beneficiary personal identification information,
when the GAO failed to analyze 35 out of the 41 responses. In
actuality, when the responses are analyzed, correct answers are
actually being provided a majority of the time. Further, the bulk of
the responses characterized as ``inaccurate'' were related to the test
caller's request that the CSR use only brand name drugs (i.e., no
generic drug substitution). This request is highly unusual in our call
experience as generic versions of a drug are identical in their
clinical effects. However, we have subsequently modified the web tool
used by our CSRs to make it easier to override the generic drug
substitution logic in the tool.
Monitor the accuracy and completeness of CSRs responses to callers'
inquiries and identify tools targeted to improve their performance in
responding to questions concerning the Part D benefit, such as
additional scripts and training.--We have worked hard to ensure
beneficiaries have access to accurate and clear information when they
call 1-800-Medicare. Our ongoing monitoring program, which evaluates a
random sample of hundreds of actual calls received each month, has
found that calls to 1-800-MEDICARE in 2006 have been answered
accurately 93 percent of the time. The high accuracy rate is reflected
in high rates of overall satisfaction from 1-800-MEDICARE callers,
which averaged 84 to 85 percent in February and March.
Improve the usability of the Part D portion of the Medicare website
by refining web-based tools, providing workable navigation features and
links, and making web-based forms easier to use and correct.--CMS is
continually enhancing and refining their web-based tools to provide
Medicare beneficiaries and their caregivers the information needed to
compare, choose and enroll in a prescription drug plan that best meet
their needs. We summarize some of our recent enhancements below. Online
enrollment has been highly successful, as evidenced by the 3 million
beneficiaries who have enrolled in the prescription drug plans using
CMS' web-based drug plan finder. Our partner organizations have used
the web tools to assist millions more with their enrollment-related
needs. The high level of online enrollment and use by partners
indicates that many people have found that this resource is useful and
effective for undertaking the most important step of enrolling in a
drug plan, and we are pleased that thousands more are using it every
day.
We cannot emphasize enough CMS' commitment to continuously improve
the communications with beneficiaries and other constituents. We want
our websites to continue to be recognized as benchmarks for excellence.
Attachment A outlines improvements that we have made to the website
since the GAO review and we believe demonstrate our continued
commitment to excellence.
All of our communications methods, in conjunction with our far-
reaching grassroots efforts, have helped provide the important
information about Part D needed by beneficiaries, providers and
partners to ensure the Medicare drug program is a success. In fact, the
vast majority of beneficiaries are using their coverage to save money
and get protection for the future: actual premiums and drug costs are
much lower than had been expected because of strong competition, and
because beneficiaries are using the enrollment tools to choose plans
that save them more (over 73 percent of beneficiaries are enrolling in
plans stand-alone prescription drug plans with premiums below the
average); the drug plans are successfully filling over three million
prescriptions a day; and each week hundreds of thousands of
beneficiaries are enrolling in the new program.
Tab A attached provides additional details about our communications
materials and approaches. Also attached are technical comments for your
consideration in Tab B. We will use the findings of the GAO report
going forward as we continue our commitment to ensure that Medicare
beneficiaries have the information they need to make informed health
care decisions.
Tab A
DETAILED INFORMATION ABOUT PART D EDUCATION AND OUTREACH
Over the past two years, we have dedicated significant resources to
the development and implementation of an extensive education and
outreach campaign surrounding Medicare prescription drug coverage,
including a variety of beneficiary publications and materials, the 1-
800-MEDICARE helpline, the Medicare Prescription Drug Plan Finder web
tool on www.medicare.gov, personalized assistance via the State Health
Insurance Assistance Program (SHIP) counseling program, and local
enrollment events. All of these initiatives are rooted in a foundation
of continuous quality improvement that involves identifying the
information that needs to be conveyed, using consumer research to
determine the most effective messages and vehicles, preparing materials
accordingly, and measuring material effectiveness. This thorough,
comprehensive and careful process ensures that all of our educational
materials are as accurate, clear and informative as possible.
Handbook and other written materials
CMS has produced and disseminated an unprecedented number of
written communication products on Medicare prescription drug coverage.
These materials meet their intended goal of quickly and easily
providing action-oriented information on a variety of topics related to
Part D. Written materials exist in the form of booklets, brochures,
fact sheets and letters. Some key communication products are available
in Braille and audiotape, and many have been translated into alternate
languages to increase accessibility to information.
Medicare & You Handbook
The Handbook is an important information source for
all Medicare beneficiaries on the Medicare program and their
medical and drug coverage. Each year, all beneficiary
households receive a copy and we know from our consumer
research that beneficiaries keep it to use as a reference
source. Our customer surveys of beneficiaries who read the
Medicare & You 2006 Handbook, conducted in January-February
2006, showed that 72 percent were ``very'' or ``somewhat
satisfied'' with the Handbook.
For 2006, we updated the Medicare & You Handbook to
reflect information on the new Medicare prescription drug
coverage by including a summary of the new coverage and
information on how it can help Medicare beneficiaries in
different situations. In addition, we reorganized the Handbook
to help Medicare beneficiaries decide whether and how to choose
among alternative plans. For example, a prominently highlighted
box on the inside cover of the Handbook serves to remind
beneficiaries that they need to make a choice about
prescription drug coverage for 2006. Beneficiaries are directed
to the specific Handbook section that provides more details on
how to select a prescription drug plan.
The Medicare & You Handbook has been designed to
assist beneficiaries in deciding how to choose a plan based on
cost, coverage, convenience and peace of mind both now and in
the future. In addition to general information, the Handbook
includes information for beneficiaries based upon their current
prescription drug coverage status.
CMS uses a series of steps before, during, and after
printing the Medicare & You Handbook to ensure accuracy. Some
steps may be combined or omitted as appropriate for other
targeted publications and deadlines for publication.
Before printing the Handbook, CMS conducts multiple
rounds of internal review by program staff experts in
components throughout CMS. CMS also subjects the Handbook to
expert review by external organizations. CMS solicits comments
from an extensive list of advocacy groups, academic partners,
industry trade organizations, Congressional staff, and other
interested stakeholders. CMS writers/editors do the final
proofing. Finally, the CMS Office of External Affairs/Graphics
reviews the Handbook. CMS provides a final desktop publishing
troubleshooting check to ensure that materials include only the
files (such as logos, photos, and fonts) that CMS has legal
rights to use.
During the printing process, CMS reviews printer
``blueline'' copies. CMS reviews first proofs from the printer
to ensure the publication layout is accurate. CMS has an
opportunity to correct printer errors (generally something that
was altered in the transfer from electronic file to print
plate) or make author's alterations (errors previously missed)
before printing begins. Specially trained CMS and/or GPO staff
go on-site to the print contractor to conduct quality assurance
inspections of the publication, checking for errors as the
Handbook is being printed.
After printing, CMS carefully monitors and
investigates reports of errors in publications, including
tracking related feedback from representatives at 1-800-
MEDICARE. CMS corrects publications, as needed, and issues
updated electronic files and/or errata sheets to accompany
printed publications.
CMS is very concerned about the readability of our
publications. We have to balance the often competing goals of
explaining technical information about Medicare coverage in
clear and simple language while ensuring its accuracy. We go to
great lengths to explain terms that beneficiaries need to
understand to address readability concerns. For example, all
publications include phone numbers and web sites, in case
people need more information. CMS has found that this contact
information is nearly universally identified and understood by
beneficiaries.
GAO noted readability test score findings as evidence
that our written documents lacked clarity. CMS doesn't
routinely perform readability tests like the Fry, SMOG, FOG or
Flesch-Kincaid on completed publications. Our writers may use
these tests as tools during the drafting process to provide a
rough estimate of the readability level and identify elements
such as passive sentences, which can be readily improved. These
kinds of tests rely largely on counting syllables per word,
words per sentence, and sentences per paragraph to determine a
``grade level'' readability score which we do not find to be a
useful parameter in gauging ``readability'' of Medicare
materials because there are terms that may be unfamiliar to the
Medicare population. As such, we go to great lengths to explain
concepts that may be readily understood. For example,
``Medicare,'' ``deductible,'' ``formulary'' and
``prescription'' are all multi-syllabic words that would
inflate scores in these types of reading tests. However, they
are terms for which there are few or no simpler substitutes.
People with Medicare (and in health insurance generally),
commonly recognize most of these terms. Where they don't, as
with ``formulary,'' we use them with careful explanation in
context, which also inflates the readability test scores by
adding words to the sentence. Such tests would not account for
this phenomenon and it is not usually accounted for by omitting
certain words in the scoring process given how many terms for
which we provide detailed explanations.
These readability test scores are somewhat misleading
and incomplete as a measure of the ease or difficulty of
materials.
Plain language and literary experts like
Roger Shuy and the Georgetown University Round Table on
Language and Linguistics, the Social Security
Administration, the Maine AHEC Health Literacy Center,
the Delegates Assembly of the International Reading
Association, and the U.S. Securities and Exchange
Commission state that individual's tested literacy
level and their ability to read and understand
materials written at the corresponding grade level
rarely match.
Test scores don't take into account other
criteria that improve clarity of message, like
navigational cues and graphic elements.
It's challenging to account for multi-
syllabic terms like ``Medicare'' or ``prescription''
that are widely-understood and/or for which there are
no simpler alternatives.
When appropriate, our publications
provide a glossary to help beneficiaries understand
words that may be new to them. The Medicare & You
handbook contains such a glossary, as do our other
large booklets. However, glossaries would mitigate the
goals of brief fact sheets and letters, and therefore,
for these types of materials, every effort is made to
define difficult terms in context, which can inflate
standard readability test scores.
As an additional measure of clarity, GAO states they
used 60 ``commonly recognized guidelines'' to evaluate our
publications. It is difficult to sufficiently comment on the
findings without knowing these 60 criteria, beyond the handful
of examples in the report. However, it is important to note
that to the best of our knowledge, these guidelines were
compiled from multiple sources for the purposes of this
evaluation and are not commonly recognized as a set. We look
forward to the opportunity to review these guidelines and their
relationship to our publications in the future, to assess where
improvements might be made.
To evaluate and improve the usability of Medicare
publications, CMS hires contractors to conduct research with
beneficiaries, caregivers, and other people who help
beneficiaries. CMS uses focus groups to help us understand what
information is important to beneficiaries. We also conduct
cognitive interviews to test how well beneficiaries understand
the content in our draft publications. Our drafts are revised
based on the feedback that we receive.
Consumer testing for the Handbook dates back to 1998.
Over the years, we have qualitatively tested the Handbook with
over 1000 aged and disabled beneficiaries, caregivers, and
Medicare counselors. Each year, the basic testing is conducted
in two rounds to allow for iterative improvements. Lessons
learned from year to year are applied to each new version of
the book.
Multiple methods are used to test the book. The most
heavily relied on method is cognitive interviews where
participants are given tasks ``cold,'' that is without prior
preparation. We've also relied on triads and focus groups which
allow participants to generate ideas on how to improve the
book.
We also conduct ``diary groups'' where beneficiaries
are asked to make comments on the book as they read through it
at home and are then brought in for focus groups. Tested
content developed for particular publications is also used in
other publications as appropriate. This overlap ensures
consistency across CMS publications.
Information collected from beneficiaries earlier this
year indicated that 61 percent of respondents said the Medicare
& You Handbook was ``very easy'' or ``somewhat easy'' to
understand.
CMS elicited feedback from more than 300
beneficiaries on Part D materials. The Medicare & You handbook
language was tested by a testing contractor, BearingPoint, with
over 150 beneficiaries. This testing helped us simplify our
language and explain concepts more clearly.
GAO used similar testing methods on a smaller scale
to evaluate the clarity of our written materials. We are
interested in reviewing the details of the 18 tasks that were
used in the interviews conducted with beneficiaries and
beneficiary advisors, and understanding which tasks correlated
to which tested products. GAO's report provides no details on
the tasks that respondents completed successfully, and
describes only three tasks that were difficult. These three
indicate that the purpose and expectations of these
publications may have been overlooked. The primary goal of our
written communications in this phase was awareness--to make
beneficiaries aware of the new coverage, aware that they needed
to take some action, and aware of the resources available to
help them make decisions. None of these publications were
intended to independently lead a reader through such complex
activities as computing projected out-of-pocket costs. Other
feedback on our publications shows they are successful in
meeting their intended goals.
The National Association of Government Communicators
critiqued the Medicare & You 2005 Handbook for the 2004 Blue
Pencil Competition. The handbook received positive feedback in
the judges' ratings. The judges rated the handbook in
categories such as writing, editing, purpose, design, printing,
cost effectiveness, and dissemination.
The judges strongly agreed that the
writing was clear, concise, and appropriate for its
intended audience.
One judge wrote, ``Given the complexity
of this subject, the writing is extremely clear and
easy to understand. Technical terms are well explained,
and needed information is easy to locate.''
In the area of design, another judge
commented that, ``Choice of font, typeface, and size;
leading; and margins made the book attractive, while
ensuring accessibility for users (especially seniors).
Use of blue headings and other design elements
contributed to ease of use, as well.''
In the category of purpose, the judges
strongly agreed that the purpose of the handbook is
clear and that the handbook gets its message across
with well-supported topics. As an overall final
comment, a judge wrote, ``This entry is very well
suited to its purpose and audience.''
CMS began preparations for the 2007 Medicare & You
Handbook in late December 2005. To date, staff and leadership
have held input meetings with key advocates and stakeholders,
tested early draft revisions with beneficiaries, established a
firm project plan, and instituted additional quality assurance
and proofing processes. The Handbook is currently on schedule
for its required mailing in the fall of this year, with a
comprehensive external review process ending this week and
extensive consumer testing scheduled in mid-May.
1-800-MEDICARE
It is a top priority at CMS to ensure that beneficiaries have
timely access to accurate information and receive satisfactory service
when contacting 1-800-MEDICARE.
Between 2004 and the beginning of the open enrollment
period, CMS conducted numerous activities to prepare for the
prescription drug benefit, including the development of a
comprehensive training curriculum on the prescription drug
benefit and the Plan Finder tool for Customer Service
Representatives (CSRs). Since November 15, 2005, CMS has made
continuous updates to scripts and reference materials for CSRs
to ensure they are able to communicate accurate information to
beneficiaries and people calling on behalf of beneficiaries.
CMS's quality monitoring program has found that in
2006, calls to 1-800-MEDICARE have been accurate 93 percent of
the time. This quality monitoring program is conducted by
contractors who run the call centers. CMS monitors at least 4
calls per month for each of our thousands of CSRs to identify
improvement and training opportunities.
These are not just mystery shopping calls, which are
limited to topics chosen by researchers, but actual calls which
are representative of the information Medicare beneficiaries
want to know. To ensure reliability and accuracy, all monitors
score a sample of calls on a weekly basis and meet to review
their approaches. The data is analyzed constantly and is used
to take immediate corrective action. This work is overseen by a
team within CMS dedicated to the quality of the 1-800-MEDICARE
call centers.
Examples of topics receiving the highest volume of
inquiries at our call centers include:
How to enroll in a plan to obtain
prescription drug coverage
Complaints about drug coverage
How to apply for the limited-income
subsidy
Since the beginning of the new prescription drug
benefit, CMS has taken many steps to help beneficiaries get the
information they need to select a drug plan. For example, CMS
acquired additional infrastructure including telephone lines
and workstations at call center sites.
CMS increased the number of customer service
representatives (CSRs) from 3,000 in June 2004 to as many as
7,800 to handle beneficiary calls with minimal wait times.
On average, from November 15, 2005 to April 12, 2006,
callers have experienced wait times of less than 2 minutes,
with longer waits sometimes occurring during peak call periods.
Call volume to 1-800-MEDICARE peaked around 400,000 calls per
day in mid-November when enrollment began, and again in early
to mid-January. Currently, call volume reaches 200,000 calls
per day on the highest volume day and levels out around 150,000
per day during the remainder of the week. Call volumes have
continued to increase slightly since then.
CMS recognizes that not all beneficiaries are able to
use, or have access to, the internet, which is the platform for
the useful Medicare Prescription Drug Plan Finder tool. As part
of our outreach and communication efforts, CMS trained
additional staff exclusively on the use of the Medicare
Prescription Drug Plan Finder tool so that they could be
dedicated to answering calls only about the prescription drug
benefit and available plan options.
We expanded responsibilities and provided additional
training for some CSRs and advanced training for others. We
required CSRs to take written exams and test calls for
certification before allowing them to take live calls. All CSRs
have one week of classroom training followed by two or three
additional days of practice calls, simulation, quality
monitoring, and follow-up coaching to ensure peak performance.
Finally, we monitored newly-trained CSRs and those who would
benefit from additional coaching at a higher level.
This year, CMS implemented a 1-800 MEDICARE caller
satisfaction survey conducted by Pacific Consulting Group, an
independent contractor. This survey provides 1) satisfaction
tracking over time and 2) an early warning system that can
point to potential service problems. Improvements can then be
implemented relatively quickly to enhance caller satisfaction.
These CMS customer satisfaction surveys indicate that the bulk
of callers who interact with our CSRs, 87 percent are satisfied
with their experience. They are particularly pleased with how
courteous and patient the CSRs are (rated at 97 percent). These
responses came not only from people with Medicare, but also
friends or relatives calling on their behalf, who made up 34
percent of callers during March 2006.
Currently, 500 surveys are conducted each week with
400 callers who spoke with CSRs and 100 callers who used the
Interactive Voice Response System.
The data below depict results from weekly calls for those callers
that spoke to a CSR. The results show the percentage of respondents in
the weeks January 16th, February 27th and March 6th that strongly or
somewhat agree with the statements listed below.
Survey Metric
Week of January 16th February 27th March 6th
(% agree--strongly or somewhat to the
following statements)
CSR was helpful 84% 89% 88%
CSR understood issue or 83% 86% 88%
concern
CSR explained things to me 83% 86% 84%
in way I could understand
I received all the 67% 72% 73%
information I needed
The CSR was knowledgeable 81% 86% 85%
I received information 75% 80% 80%
specific to my issue
Overall I am satisfied 79% 84% 85%
Pharmacists are a key partner in the implementation
of the Medicare prescription drug benefit. To ensure that
pharmacists have access to the information they need to assist
beneficiaries at the pharmacy counter, CMS developed a
dedicated pharmacist 1-866 telephone line. Incoming calls
through the dedicated pharmacist line are routed to the head of
the queue at the 1-800 MEDICARE number, wait times are
substantially lower than the overall average for beneficiaries
and other individuals calling the 1-800-MEDICARE line. This
helps to relieve any burden on pharmacists, and also ensures
that pharmacists are able to assist beneficiaries immediately
at the pharmacy counter.
CMS is well-prepared to handle increased call-volume
that may occur before the May 15th enrollment deadline. We have
increased the number of CSRs from 3,000 in June of 2004 to
6,000 CSRs for May enrollments. We have also acquired
additional infrastructure including telephone lines and
workstations at call center sites. We have refined our CSR
scripts by reducing redundant information, indexing scripts for
quick access, and including probing questions to help the CSRs
better identify callers' concerns.
Despite our efforts, some beneficiaries will wait
until the deadline is near, but our top priority is to
encourage people to enroll now and avoid the rush.
Medicare.gov
To ensure that the new Plan Finder tool was well-
designed and easily used by beneficiaries and other
individuals, CMS worked with a professional website development
contractor, CGI Federal and a subcontractor, Navigation Arts.
As the Medicare Prescription Drug Plan Finder was
being designed, CMS engaged in multiple rounds of consumer
testing to ensure its usefulness and simplicity. CMS conducted
three rounds of in-depth interviews with Medicare beneficiaries
to obtain feedback as drafts of the tool were developed
throughout 2005. Final interviews that focused on messages
tailored specifically for beneficiaries based on their
insurance information were conducted in September 2005. CMS
conducts ongoing consumer research to continue to improve
understandability and usability.
CMS also conducts thorough and ongoing analyses of
possible outliers in data, including the Medicare Prescription
Drug Plan Finder plan pricing data, pharmacy network,
mismatched formulary identifiers (NDC codes), and other missing
formulary data. If problems are found with a plan's data,
information on the plan will be suppressed from the website
until CMS works with the plan to correct its information and
properly display it.
We are proud to say that CMS has received a number of
awards for its website from independent organizations. These
awards include the ``eHealthcare Leadership Award'' at the
Ninth Annual Internet Conference, the ``2005 Pioneer Award'' at
the E-Gov Institute and Federal Computer Week, and the
``Independent Technology Supporting Service to Our Country''
award at the Eighth Annual Technology Gala to benefit Juvenile
Diabetes.
We believe that the website has been extremely
successful in providing beneficiaries, their caregivers and CMS
partners with clear, accurate and timely information to help
them enroll in drug plans. In fact, CSRs at 1-800-MEDICARE have
access to the Plan Finder to help beneficiaries find the
information they need about choosing a plan, enrolling in a
plan, or other issues related to accessing their prescription
drug coverage. The Plan Finder also has been a critical tool
for SHIPs and other partners, such as the ABC Coalition and
Medicare Today, to use when conducting outreach to
beneficiaries.
Results from a web-based customer satisfaction survey
conducted by MSInteractive, a subsidiary of Market Strategies
that specializes in web-site satisfaction research, were very
positive. This research, conducted in December 2005, focused
only on the prescription drug plan finder tool.
The survey indicated that content, interactivity, and
navigability have the greatest impact on satisfaction. During
development of the tool, CMS contracted with a web design firm
to leverage their expertise on these impacts. CMS continues to
focus on these areas in future enhancements and updates.
The site's ``appearance'' and ``privacy'' scored
highly, but had no impact on overall satisfaction.
66 percent of those who enrolled were
either ``somewhat'' or ``strongly satisfied'' with the
tool.
80 percent of those who enrolled would
recommend the tool to a friend.
70 percent of users agreed with this
statement, ``I know more about the Medicare
Prescription Drug Plans now that I've used this site.''
Regular internet users had higher ratings
of the site.
In January and February 2006, Abt
conducted a telephone survey of a random sample of
beneficiaries and found that:
14 percent of respondents used the
www.medicare.gov website to get information
about Medicare;
60 percent said it was ``very easy'' or
``somewhat easy'' to understand the information
from www.medicare.gov;
Beneficiaries who rated their
satisfaction with the information received from
medicare.gov as ``very/somewhat'' satisfied outnumbered
the ``dissatisfied'' beneficiaries 71 percent to 19
percent. Seven percent of beneficiaries were neither
``satisfied nor dissatisfied.''
Overall, the drug plan finder element of the website
has received 164.6 million page views between November 15, 2005
and April 26, 2006. We do not have a way to differentiate
whether those hits were from beneficiaries or their caregivers.
To date, 3 million beneficiaries have enrolled in
prescription drug plans using the Plan Finder. That indicates
that at least that many people were satisfied enough with the
information they received to undertake the most important step
of enrolling in a drug plan.
The Frequently Asked Questions (FAQ) section of
www.medicare.gov has been accessed more than one million times
since January 1, 2006. CMS has also responded to more than
19,000 emails received through the FAQ section, with 93% of
them being resolved satisfactorily in the first response.
State Health Insurance Assistance Programs (SHIPs)
While the SHIPs play a significant role in
beneficiary counseling and education on Part D, CMS has also
created a national grassroots network of more than 24,000
partners and 140 coalitions that rely on traditional tools to
help them provide personalized counseling to Medicare
beneficiaries every day.
The network CMS built is diverse and committed, with
members from every sector, including advocacy groups,
government agencies, service clubs, faith-based organizations,
benefits counselors, trained volunteers and healthcare
professionals such as doctors and pharmacists.
This extensive, grassroots-level partnership is truly
unprecedented for the Medicare program. It's reaching out to
people with Medicare all over the country . . . ``where they
live, work, play, and pray.'' This approach has helped
personalize Medicare in every corner of the country.
Preliminary data from the State Health Insurance
Assistance Programs (SHIPs) shows that individual in-person and
telephone contacts, presentations and meetings reached a total
of 4.5 million clients, compared to 2.5 million in the previous
grant period.
Other Selected Activities
The Mobile Office Tour has traveled 500,000 miles
since last fall and approximately half of the territory covered
and events have been in rural areas, in an attempt to reach out
to a variety of beneficiaries and partners at the local level.
We knew we would have to develop a grassroots capacity and
local networks to supplement the CMS regional structure to
provide the necessary education and enrollment assistance at
the community level. This would involve reaching out, not just
to our traditional partners such as the SHIPs, but to all the
groups and organizations that have contact with our
beneficiaries on a daily basis ``where they work, where they
play, and where they pray.'' We needed to involve individuals
and institutions: family members and friends; current and
former employers; churches and synagogues; financial advisors
and community centers, to name but a few.
CMS is reaching out directly to beneficiaries through
an extensive paid and earned media campaign focusing on press
and radio, both of which are highly localized in informing
beneficiaries of special events in their neighborhoods.
As we approach May 15, many members of the Cabinet
whose agencies have helped build awareness of the prescription
drug benefit through their own programs have joined efforts
with CMS, including the United States Department of
Agriculture, Department of Commerce, Department of Labor and
Housing and Urban Development.
To minimize a possible last minute rush to enroll,
CMS is making a monumental effort to enroll beneficiaries well
before the May 15th deadline. In the past month, there have
been 1,000 events per week across the country to provide
beneficiaries with personalized help so they understand the
prescription drug coverage options available to them and they
can enroll in a plan. In our enrollment efforts, we are
targeting beneficiaries who may qualify for the low-income
subsidy and beneficiaries who live in rural areas. Our
enrollment events are fully coordinated with the Social
Security Administration (SSA) to assist beneficiaries in
applying for extra help, as well as to help them enroll in a
plan.
Tab B
TECHNICAL COMMENTS FOR FURTHER CONSIDERATION
Regarding GAO finding for www.medicare.gov tool that
defaulting to generic drugs complicates a user's search for
drug plans covering brand name drugs:
CMS made a deliberate decision to default to generic
substitution of brand name drugs. A user is able to
override the default. However, because of the great
opportunity for beneficiary savings and the absence of
any medical difference between brand and generic
versions of a drug, we want to emphasize that generic
drugs are the same as the brand name drug in active
ingredients, dosage, safety, strength, how it is taken,
how it works in the body, quality, performance, and
intended use. Therefore, the Agency stands behind its
decision to default to direct generic substitution. We
have provided below the exact language from the
Medicare Prescription Drug Plan Finder website. In
addition, in response to a GAO suggestion, we have
changed the site so that if a user opts to override the
generic substitution, that change is persisted even
when the user makes other changes such as the addition
of drugs.
The language from the site is: We recommend that you
let us price plans in your area using the lower-cost
generic version of your selected drug(s). A generic
drug is safe and effective and it has the same risks
and benefits as the original brand-name drug but at a
lower cost.
Today, MOST prescriptions are filled with generic
drugs. A generic drug is the same as a brand-name drug
in active ingredients, dosage, safety, strength, how it
is taken, how it works in the body, quality,
performance, and intended use. Generic drugs are less
expensive because generic drug companies compete to
provide drugs after the drug patents end. Generic drugs
are thoroughly tested and must be approved by the Food
and Drug Administration.
If you choose not to use the lower-cost generic
drugs, we will price the drugs as you entered them. You
should be aware that some plans do not cover the brand
version of a drug if the generic is available. If you
purchase a drug that is not covered by the plan, you
will pay the full price of the drug, and the amount you
pay will not be counted towards your deductible or out
of pocket cost limits.
Regarding 1-800-MEDICARE Average Speed of Answer:
CMS is staffing 1-800-MEDICARE at a level to achieve
an average speed of answer of 3 minutes or less as
measured over a month time period. We have consistently
achieved this goal even in the month of January where
we handled 5.8 million calls. During the month, there
will be periods of time where the call wait time is
under or over the 3 minute level with longer waits
occurring during spikes. We use an ``all hands on
deck'' where supervisors, trainers, etc. take calls to
help manage the spike periods and we change staffing
patterns as needed where changes in call patterns are
noted. In particular, over this time period, we have
increased staffing at the late night hours and weekends
as a result of increased calls in the 11 pm-1 am
timeframe. The actual average speed of answer for
recent months is listed below.
----------------------------------------------------------------------------------------------------------------
Month Average Speed of Answer for Month
----------------------------------------------------------------------------------------------------------------
January 2.49 mins
----------------------------------------------------------------------------------------------------------------
February 0.51 mins
----------------------------------------------------------------------------------------------------------------
March 0.25 mins
----------------------------------------------------------------------------------------------------------------
April 0.50 mins
----------------------------------------------------------------------------------------------------------------
Regarding 1-800 MEDICARE CSRs' inability to respond
with caller's personal information:
1-800 MEDICARE CSRs do have the ability to use the
non-authenticated, general search for callers who do
not have their Medicare number. However, CMS has
encouraged CSRs to stress the importance of
authenticated Prescription Drug Plan Finder searches to
callers. The importance of authenticated searches is
stressed in the CSR training materials and scripts. We
have placed warnings throughout the training materials
about the downside of proceeding without the
personalized information and CSRs do suggest that the
person call back when they have it.
While we realize the importance of authentication,
we have emphasized to CSRs through refresher training
and broadcast messages that there will be occasions in
which callers will be inquiring on behalf of a
beneficiary. It has been emphasized to CSRs that non-
authenticated general information is to be shared if
the caller is unable to provide specific information
that would enable a more detailed search. The
additional reminders released state the following: If a
caller indicates they are calling for someone else and
just wants general information on plans available in
their area, you do not need to personalize the search
if the caller does not want to. You can provide general
plan information and send a personalized booklet if
requested.
Regarding Compliance with Section 508
CMS submitted a copy of the Voluntary Product
Assessment Template (VPAT) on February 27, 2006, as
well as Watchfire WebXM reports on March 13 & April 24,
2006. The 508 findings in these reports were minor and
based on mostly false positive results. One issue dealt
with occasional missing ALT text on images and another
issue dealt with form labels.
A number of applications on Medicare.gov, including
MPDPF, include a tabbed interface. In MPDPF, there are
3 tabs: Prescription Drug Plan Finder, Learn How Plans
Work, and Plans in Your State.
To enable some Javascript code within the tabs, the
links are coded as a simple form (with no input
fields).
The Watchfire WebXM suite expects to see a
traditional form with input fields, which should always
have associated labels for maximum accessibility.
However, since there are no input fields, label tags
would be inappropriate in this context.
These reports confirm that the site complies with
the Rehabilitation Act Amendments of 1998 (Section
508).
Regarding GAO recommendation that CMS improve
usability of the Part D portion of website:
The Medicare Prescription Drug Plan Finder has
monthly releases and ad hoc enhancements to provide
Medicare beneficiaries and their caregivers the
information needed to compare, choose, and enroll in a
prescription drug plan that is right for them.
The following are a few of examples of recent site
improvements:
Drug information savings
functionality: This functionality allows users
to save their drug information during their
initial session and retrieve it easily each
time they revisit the Web site with just a
confirmation number and a password date. This
allows them to compare plans directly without
taking the time to reenter all their
medications.
Print My Drug List functionality:
This functionality allows beneficiaries/users
to print out and conveniently keep a record of
their medication list that they can use when
needed, such as during doctor's appointments or
visits to the ER.
Drug Details page: This page
provides a complete overview of a plan's
benefit, specific to the drugs the beneficiary/
user has entered. It provides the full cost of
the drug, cost of the drug during every phase
of the benefit (i.e. during the deductible,
initial coverage, gap, and catastrophic phase)
and coverage restriction information (i.e. step
therapy, quantity limitations, and prior
authorization). In a simple table format,
beneficiaries/users can view and understand
what their drug cost will be throughout the
year and what if any restrictions exist for
coverage of their drugs.
Improvements on the drug entry
functionality: A number of improvements have
been made to the drug entry functionality with
the goal of allowing beneficiaries/users to
easily find their medication and enter their
specific dose and quantity.
__________
Appendix IV: Agency Comments and Our Evaluation
We received written comments on a draft of our report from CMS (see
app. III). CMS said that it did not believe our findings presented a
complete and accurate picture of its Part D communications activities.
CMS discussed several concerns regarding our findings on its written
documents and the 1-800-MEDICARE help line. However, CMS did not
disagree with our findings regarding the Medicare Web site or the role
of SHIPs. CMS also said that it supports the goals of our
recommendations and is already taking steps to implement them, such as
continually enhancing and refining its Web-based tools.
CMS discussed concerns regarding the completeness and accuracy of
our findings in terms of activities we did not examine, as well as
those we did. CMS stated that our findings were not complete because
our report did not examine all of the agency's efforts to educate
Medicare beneficiaries and specifically mentioned that we did not
examine the broad array of communication tools it has made available,
including the development of its network of grassroots partners
throughout the country. We recognize that CMS has taken advantage of
many vehicles to communicate with beneficiaries and their advisers.
However, we focused our work on the four specific mechanisms that we
believed would have the greatest impact on beneficiaries--written
materials, the 1-800-MEDICARE help line, the Medicare Web site, and the
SHIPs. In addition, CMS stated that our report is based on information
from January and February 2006, and that it has undertaken a number of
activities since then to address the problems we identified. Although
we appreciate CMS's efforts to improve its Part D communications to
beneficiaries on an ongoing basis, we believe it is unlikely that the
problems we identified in our report could have been corrected yet
given their nature and scope.
CMS raised two concerns with our examination of a sample of written
materials. First, it criticized our use of readability tests to assess
the clarity of the six sample documents we reviewed. For example, CMS
said that common multisyllabic words would inappropriately inflate the
reading level. However, we found that reading levels remained high
after adjusting for 26 multisyllabic words a Medicare beneficiary would
encounter, such as Social Security Administration. CMS also pointed out
that some experts find such assessments to be misleading. Because we
recognize that there is some controversy surrounding the use of reading
levels, we included two additional assessments to supplement this
readability analysis--the assessment of design and organization of the
sample documents based on 60 commonly recognized communications
guidelines and an examination of the usability of six sample documents,
involving 11 beneficiaries and 5 advisers.
Second, CMS expressed concern about our examination of the
usability of the six sample documents. The participating beneficiaries
and advisers were called on to perform 18 specified tasks, after
reading the selected materials, including a section of the Medicare &
You handbook. CMS suggested that the task asking beneficiaries and
advisers to calculate their out-of-pocket drug costs was inappropriate
because there are many other tools that can be used to more effectively
compare costs. We do not disagree with CMS that there are a number of
ways beneficiaries may complete this calculation; however, we
nonetheless believe that it is important that beneficiaries be able to
complete this task on the basis of reading Medicare & You, which, as
CMS points out, is widely disseminated to beneficiaries, reaching all
beneficiary households each year. In addition, CMS noted that it was
not able to examine our detailed methodology regarding the clarity of
written materials--including assessments performed by one of our
contractors concerning readability and document design and
organization. We plan to share this information with CMS.
Finally, CMS took issue with one aspect of our evaluation of the 1-
800-MEDICARE help line. Specifically, CMS said the 41 percent accuracy
rate associated with one of the five questions we asked was misleading,
because, according to CMS, we failed to analyze 35 of the 100
responses. However, we disagree. This question addressed which drug
plan would cost the least for a beneficiary with certain specified
prescription drug needs. We analyzed these 35 responses to this
question and found the responses to be inappropriate. The CSRs would
not provide us with the information we were seeking because we did not
supply personal identifying information, such as the beneficiary's
Medicare number or date of birth. We considered such responses
inappropriate because the CSRs could have answered this question
without personal identifying information by using CMS's Web-based
prescription drug plan finder tool. Although CMS said that it has
emphasized to CSRs, through training and broadcast messages, that it is
permissible to provide the information we requested without requiring
information that would personally identify a beneficiary, in these 35
instances, the CSR simply told us that our question could not be
answered. CMS also said that the bulk of these inappropriate responses
were related to our request that the CSR use only brand-name drugs.
This is incorrect--none of these 35 responses were considered incorrect
or inappropriate because of a request that the CSR use only brand-name
drugs--as that was not part of our question.
Chairman JOHNSON OF CONNECTICUT. Thank you.
Ms. Larkin.
STATEMENT OF JOYCE LARKIN, VICE PRESIDENT, PUBLIC AFFAIRS AND
COMMUNITY RELATIONS, OVATIONS, UNITED HEALTH GROUP
Ms. LARKIN. Thank you, Chairwoman Johnson and
Representative Stark and the other Members of this
Subcommittee. I appreciate the opportunity to testify before
you today about the implementation of the new Medicare Part D
drug benefit. My name is Joyce Larkin, and I am vice president
of public affairs and community relations for Ovations, a
United Health Group company.
Ovations is solely dedicated to meeting the health care
needs of individuals age 50 and over, including those who are
Medicare eligible, those with lifelong chronic conditions, and
those who are disabled. I should say that prior to joining
Ovations, I spent 15 years working here on the Hill for one of
your distinguished colleagues, Congressman Stokes of Ohio, a
real health care champion, so it is a real pleasure to be here
today.
Our company has a life-long commitment to enhancing health
care for older Americans. We do that by our participation in
Medicare fee-for-service programs, health plans, and
demonstration programs for frail Medicare beneficiaries. As you
know, Ovations is the only company to offer the Medicare Part D
benefit in all 50 States, the District of Columbia, and each of
the U.S. territories that has Part D programs.
Since January, we have processed approximately 50 million
prescription drug claims. Our savings projections align with
what CMS has projected, roughly $1,100 per year for
beneficiaries who previously lacked coverage. As CMS also
reported, we are the leading sponsors for both the Medicare
prescription drug plans or PDPs and also the Medicare Advantage
plans, which now have prescription drug coverage. We believe
that our experience provides an opportunity to offer insight to
this panel as you continue to evaluate the Medicare drug
benefit.
Before the startup of the program, we engaged in a broad
national education campaign around Part D. Our goal was to
ensure that individuals understood the benefit and how to
enroll prior to the enrollment season. As part of this effort,
we developed a consumer booklet, which became known as the Show
Me Guide. We published the booklet at no cost to consumers in
seven languages and distributed more than 10 million copies.
Today, we appreciate the opportunity that we have had to
work with some very strong advocacy groups and Congressional
groups around education. Our partnerships have included working
with the Congressional Black Caucus; Reverend Jackson and the
Rainbow-PUSH Coalition; the National Kidney Foundations; the
National Medical Association; and the American Association for
Services and Homes for the Aging. These partnerships have
resulted in more than 400 Medicare Part D education and
outreach events around the country. In some States, such as
Illinois, we have participated in more than 50 such events.
We continue to be encouraged by the stories we are hearing
every day about people receiving prescription drug coverage for
the first time: beneficiaries such as Fran Cooper, a person who
was very skeptical about the program in the beginning. She is
now saving money, and she is going around the country educating
other beneficiaries. Betty Noord, a Medicare beneficiary in
Wisconsin, her choice was a Medicare Advantage plan, which now
offers her a zero premium along with prescription drug
coverage. She is estimating that her costs have decreased from
$9,000 to roughly $2,000 per year.
It is clear that implementing a program of this scale is an
enormous task, and it does not come without challenges. For
United, more than 4.5 million enrollees are participating in
Part D through our program; nearly 3 million of which are
enrolled in our stand-alone Part D plans.
While these numbers are impressive, we share your concern
that the system has not worked well for some beneficiaries.
This includes some low-income individuals as well as some that
are dual eligible. I can commit to you that we will continue to
do all that we can to ensure that those problems and those
issues are addressed.
We have done things to help beneficiaries, such as
increasing our call center staff, decreasing the time that
consumers have had to wait for information, deeming individuals
eligible for coverage so they did not have to leave the
pharmacy without their prescriptions, and working with
pharmacies, independent pharmacies, retail pharmacy outlets, to
make sure that the Part D experience is positive for them.
While some of our implementation challenges are behind us, we
want to make sure that this benefit works well for every single
consumer.
So, I appreciate the opportunity to appear before this
panel today and would welcome any questions that you might
have.
[The prepared statement of Ms. Larkin follows:]
Prepared Statement of Joyce Larkin, Vice President, Public Affairs and
Community Relations, Ovations, UnitedHealth Group
Introduction
Ovations, a business unit of UnitedHealth Group, is pleased to
submit this testimony to the Subcommittee on Health for its
consideration. Ovations is solely dedicated to meeting the healthcare
needs of individuals age 50 and over, including those who are Medicare
eligible, people with lifelong chronic conditions, the frail elderly
and people who are disabled.
Our company has a long-standing commitment to enhancing health care
for older Americans and other Medicare beneficiaries. In fact, we
provide the most comprehensive array of health and well-being services
to these populations through the traditional Medicare fee-for-service
program, health plans, and demonstration projects for the frailest
Medicare beneficiaries. Our participation in Medicare programs is
fundamental to our core mission: to facilitate broad and direct access
to affordable, high quality health care that results in improved health
outcomes for individuals, families and communities.
As you know, Ovations/UnitedHealth Group is the only company to
currently offer the new Medicare prescription drug benefit in all 50
States, the District of Columbia and each of the U.S. territories
covered under the Part D program. A little over four months ago,
Medicare beneficiaries who were enrolled began using the new Medicare
prescription drug benefit.
Since January 1 we have processed approximately 50 million
prescription drug claims, with beneficiaries yielding savings
consistent with the Centers for Medicare & Medicaid Services' (CMS)
estimate of $1,100 per year for beneficiaries who previously lacked
prescription drug coverage. As CMS recently reported we are the leading
sponsor in terms of enrollment for both stand-alone Medicare
Prescription Drug Plans (PDPs) and Medicare Advantage Plans with
Medicare Prescription Drug Coverage (MA-PDs).
With our experience in working with CMS and Congress to implement
the new Medicare drug benefit, we believe we can continue to offer a
valuable perspective as this Committee exercises its oversight in
evaluating the new Medicare prescription drug program.
Early Challenges
Implementing a program of such unprecedented size and scale is an
enormous task and has not been without challenge. CMS has reported the
Medicare Part D program is now contributing to the well-being of more
than 30 million beneficiaries as of April 18, including more than eight
million Medicare beneficiaries enrolled in PDPs who have signed up
individually for prescription drug coverage. As of March, more than 4.5
million enrollees were participating in Part D through our PDP and MA-
PD plans. CMS reported as of the end of April that nearly 3.8 million
beneficiaries were enrolled in our stand-alone Part D plans.
Approximately one-third of these beneficiaries are dual eligibles.
While these numbers and statistics demonstrate the Medicare Part D
program is working for millions of Medicare beneficiaries, we share the
Committee's concern that, in some cases, the system has not worked well
for all beneficiaries. This was especially true for low-income and
dually eligible enrollees, largely due to unanticipated information
gaps in the system. At the outset of the program, information on
eligibility was not available to pharmacies for certain duals and other
low-income beneficiaries in the way it should have been, primarily 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.
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
We have done, and are continuing to do everything we can to work
with CMS, the Social Security Administration, states, pharmacists, and
other partners to help resolve outstanding enrollment and information
technology system issues.
Early on, when we recognized there was an issue with certain
beneficiaries such as duals and other low-income individuals accessing
their benefits, we acted quickly to ensure that these individuals would
have immediate access to their Part D benefit regardless of whether
they appeared immediately in the system, including:
Activating a beneficiary's plan coverage by
``assuming'' or ``deeming'' an individual's enrollment even
before receiving confirmation of enrollment from CMS, where
possible;
Assigning beneficiaries to a subsidized co-payment
class even in advance of a CMS confirmation;
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 a very
small number of drugs for which our Pharmacy & Therapeutics
Committee has special safety concerns for older adults; and
Dramatically increasing call center staff available
to assist beneficiaries and pharmacists by resolving issues
related to the program's early data problems. As a result of
these efforts, we are pleased to report for the month of March
that we received over 1.3 million calls from beneficiaries,
while achieving an average speed to answer of approximately 15
seconds and a less than 1.5% abandonment rate. Our call lines
dedicated to supporting pharmacists achieved similar levels of
performance.
While many of these early implementation problems seem to be behind
us, we are mindful of the challenges ahead in ensuring that the Part D
implementation proceeds smoothly. That is why we continue to be focused
on working more closely with pharmacists, including community
pharmacists, on our own and through our trade association. We
appreciate the important role that pharmacists are playing in the
implementation of the new Medicare drug benefit. Our work with them has
included, among other actions, making rapid improvements in call center
operations, enhancing pharmacist support, and developing temporary
solutions to meet the needs of low-income beneficiaries while longer-
term problems are being resolved.
We also have understood the need to proceed gradually as we move
beyond issues related to Part D's initial implementation. As an example
of this understanding, we have taken a very gradual, phased approach to
the end of the extended 90-day transition period. Our approach is to
phase in utilization management programs over a period of months,
beginning with requirements important to determining whether a drug
should be billed under Medicare Part B or D. It also involves
eliminating a number of requirements entirely and ``grandfathering''
beneficiaries for many medications. By grandfathering we are able to
permit individuals who accessed certain drugs during the extended
transition period to remain on these drugs without having to initiate
an administrative request known under Part D as a coverage
determination.
Our approach to preparing for challenges also extends to our
planning for the May 15 enrollment deadline. We are pleased to report
that we continue to receive an extremely high volume of enrollment
applications, by mail, telephonically, and over the internet. We expect
these volumes to increase as the May 15th enrollment deadline
approaches. In order to meet this continued strong demand for our
program and ensure high levels of service, we are taking steps to
ensure that our call centers are appropriately staffed and ready.
We now have more than 3,600 call center
representatives deployed at multiple call centers. This
represents a 50% increase in our staffing levels from November.
For May 15, we are also increasing our call center staff
rotations, expanding our call center hours so that
representatives are available to assist with enrollment
questions 24/7, and are using our experience from January to
learn how to better ``load balance'' calls between our various
call centers. As a result of these actions, we feel very
confident going into May 15 that Medicare beneficiaries will
find enrolling in one of our plans an easy and pleasant
experience.
Finally, we appreciate the continuing need to work closely with
states as Part D's implementation continues. In this regard, we
appreciate the steps that were taken by states in the early months of
the program to help address gaps in coverage for low-income
beneficiaries. We also appreciate the vitally important work that State
Health Insurance Assistance Programs (SHIPs) continue to undertake in
assisting Medicare beneficiaries in understanding the Part D program
and their enrollment options. The importance of states to the Part D
implementation and SHIP offices in particular was driven home to us a
few weeks ago when, as many of you know, we mailed out late payment
notices, based on a CMS model, to a number of our enrollees. While our
intention in sending the notices was to encourage members to contact us
with any issues or concerns about their Part D payment status or
selected payment method, this intention was not well communicated and
generated many calls from beneficiaries. While we ultimately spoke with
more than half of the beneficiaries who received a notice, it was the
SHIPs that served as the first line of defense in receiving these
calls, and, as we have communicated directly to all SHIP offices, we
appreciate greatly the efforts they undertook to assist our members.
Our Commitment
Most important as we look ahead to Part D's continuing
implementation is our commitment not just to the program, but to the
people we serve. We have reached out to Medicare beneficiaries in
communities across the nation to help them understand the new Medicare
drug benefit and our campaign to do so is ongoing.
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 more than 10 million
copies of the Guide to consumers, providers, advocates, and
governmental representatives at both the state and federal levels.
We are honored and appreciate the opportunity to work in
partnership with national and community-based organizations on this
important initiative. Our partnerships have included, but are not
limited to, Representative Donna Christensen and the members of the
Congressional Black Caucus; Reverend Jesse Jackson and the Rainbow/PUSH
Coalition; the National Kidney Foundation; the National Medical
Association; and the American Association of Services and Homes for the
Aging. These partnerships have resulted in more than 400 Medicare Part
D education and outreach events being held. In some states such as
Illinois, we have participated in more than 50 Medicare Part D
education events. Many of the organizations with which we have
partnerships have asked if we would be willing to continue to work with
them to make certain that Medicare beneficiaries are receiving
information on an ongoing basis.
We continue to be encouraged by the stories we 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. We have
worked with thousands of people across the country on a one-on-one
basis, educating them about the benefits of the Part D prescription
drug program.
People like Fran Cooper, a Medicare beneficiary in Nebraska who
enrolled in the AARP MedicareRx Plan. Fran, who was initially
skeptical, now saves money each month on her prescription drugs. Fran
has become a Medicare Part D ``champion.'' She is participating in
events with the Congressional Black Caucus, the National Medical
Association and other groups to educate African-Americans and
communities of color about the new Medicare drug benefit.
Betty Nord is a Medicare beneficiary in Wisconsin who was attracted
to our Medicare Complete product, one of our Medicare Advantage Plans.
She liked the product because it offered the new Medicare prescription
drug coverage with a zero premium. Betty is now enrolled in Medicare
Complete and estimates that her medical costs have been reduced
dramatically from approximately $9,000 to $2,000 per year.
And then there is Barbara Stetson, an 81-year old Medicare
beneficiary who lives in Maine. Ms. Stetson took the time to send a
special ``thank you'' letter, because having the Medicare drug benefit
is making a substantial difference to her. Before enrolling in the AARP
MedicareRx Plan, Barbara was not taking her medications appropriately,
simply because she could not afford to buy them. She now has peace of
mind and the prescription medications that she needs each day.
In addition to providing beneficiaries immediate savings, 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 both individuals and their families.
We believe that the Medicare 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.
Consistent with our commitment to our enrollees is our philosophy
regarding plan design. 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 originally contained just 39
drugs with prior authorization requirements and five with step therapy
requirements. Again, as indicated, we temporarily suspended these
requirements for all but a few drugs in order to give pharmacists and
enrollees ample time to adjust to their new Part D plans. As mentioned,
some of these requirements have now been removed entirely, and others
are being gradually phased back into place.
Still More to Do
Despite the start-up issues, there is much 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.
Critical in this regard is the particular importance of helping
lower-income individuals, especially those not eligible for Medicaid,
understand the value of enrolling in Part D. 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 stand to benefit most
from a reliable source of coverage that makes prescription drugs
available to them on an affordable basis. To accomplish this objective,
it is important that we join together to reach out to these
beneficiaries, clarify any misperceptions about the program, and remove
whatever barriers exist to their enrolling in Part D.
Conclusion
In conclusion, we would like to say that we believe the Medicare
prescription drug program is working well 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 millions of beneficiaries while
yielding significant savings.
Ovations/UnitedHealth Group is committed to working with you, CMS,
the Social Security Administration, states, pharmacists, and
beneficiaries to address current and future challenges. We are
determined to do all we can to fulfill the promise of this 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 months to come. We
especially appreciate the Committee's leadership on this important
matter and thank you for the opportunity to share our thoughts.
Chairman JOHNSON OF CONNECTICUT. Thank you very much, Ms.
Larkin.
Mr. Steinberg.
Mr. STARK. Madam Chair, if you could yield, I just had
promised Mr. Ramstad that I would welcome Ms. Larkin on his
behalf. Her company is a constituent of Mr. Ramstad's, and Ms.
Larkin flew quickly overnight to be here. Mr. Ramstad was
called away for another meeting, and I said I would welcome you
and your company on his behalf.
Ms. LARKIN. Thank you so much, Mr. Stark. Mr. Stokes sends
his regards to you and to Mrs. Johnson as well.
Chairman JOHNSON OF CONNECTICUT. We are glad to have you,
and certainly, Lou Stokes was one of our most impressive
Members for many years and still highly regarded.
Mr. Steinberg.
STATEMENT OF MARK STEINBERG, SENIOR HEALTH POLICY ANALYST,
FAMILIES, USA
Mr. STEINBERG. Thank you. Good afternoon, Madam Chairman,
Mr. Stark, Members of the Committee. I thank the Subcommittee
on Health for the opportunity to present testimony today, and
my remarks today are going to focus on two particular issues
with implementation. First, I want to talk primarily about
enrollment in the low-income subsidy, which we have heard
already some about, and then, I will turn very briefly to the
issue of prices. I think we have discussed a great deal of that
today, so I am not going to get into that in depth.
First, I want to speak about the low-income subsidy. This
should be a happy topic. I think all stakeholders on this issue
agree that the low-income subsidy is a real step forward for
some of Medicare's neediest beneficiaries. For those who
qualify, the subsidy limits cost sharing for most beneficiaries
to a very minimal amount. Others will still have some
coinsurance, but it is still substantially less than the
significant cost sharing that other Part D beneficiaries have
to pay.
Now, unfortunately, enrollment in this program has been so
far extraordinarily disappointing. The most recent data we have
available from the Social Security Administration shows that
only about 1.6 million of the estimated 7 to 8 million
beneficiaries have actually enrolled in the low-income subsidy.
That is fewer than one out of four eligible, and this is a very
disappointing result.
Now, CMS has taken a positive step recently and said that
they will permit beneficiaries who enroll in the subsidy
subsequent to May 15 to then join a Part D plan instead of
having to wait until the next open enrollment period at the end
of the year, and we applaud them for doing that. However, these
beneficiaries will still be responsible for at least a partial
late enrollment penalty.
Moreover, it is extraordinarily important that the Social
Security Administration and other organizations use their
resources to continue outreach and enrollment to low-income
beneficiaries during this time. The other big player in this
area are the State Health Insurance and Assistance Programs,
the SHIPs, who have been doing work above and beyond the call
of duty in the first few months, and they really need a great
deal of help.
As the Chairman commented, one-on-one counseling is the
best way to get people into the subsidy, particularly low-
income beneficiaries; there are a lot of factors that they have
to weigh and to have explained to them. SHIPs can do this job,
but they need help. Right now, they are funded at less than $1
per beneficiary, and we encourage Congress to take a look at
that as well as to ensure that Social Security Administration
(SSA) has all the resources it needs to do the outreach.
In addition to doing more for outreach and enrollment,
there are several legislative changes that we think could help
reach low-income beneficiaries. The first, we understand, is a
big one, but the assets test could be eliminated, if not this
year, in the future. First of all, that would ease the
enrollment process dramatically. It would allow automatic
enrollment for beneficiaries, because you would simply have to
look at their income, which is widely available through IRS
records as opposed to having to do asset evaluations. It would
also create a simpler application.
Short of that, Congress, we think, could advise that Social
Security would no longer have to evaluate the cash value of a
person's life insurance policy, which is currently counted as
an asset, and the value of which is only obtainable through
calling your life insurance company. This has been a stumbling
block for beneficiaries. Also, Social Security continues to
count in-kind support, such as if an adult child provides
housekeeping for an elderly parent, that counts as income under
the Social Security rules. We would like to see that
eliminated. We think that could ease the process significantly.
I want to talk briefly about dual eligibles, although my
colleague, Vicki Gottlich, will discuss that in depth. We know
there were a great deal of startup problems at the beginning of
2006, in January and February dealing with technical problems,
where the computer systems simply were not talking to one
another. Some of those problems have been alleviated, and we
are pleased to see that, but there are a great deal of
structural problems that remain. We heard some today already
about the differences between the Medicaid system and the new
Part D system, and my colleague, Ms. Gottlich, will extend more
on that.
Now, I would like to turn briefly to pricing, and I said I
know we have heard a lot about it this morning or this
afternoon, rather. We actually do not know what prices Part D
plans have negotiated with manufacturers. That information is
not provided. What we know is the prices that the plans then
charge to the beneficiaries. That is what we at Families USA
and other organizations have used to evaluate the prices that
Part D plans have been receiving. We assume that they must be
passing some of those savings on to beneficiaries, but it could
be as little as one penny; it could be as much as a large
share. We simply do not know that.
When Families USA did a study and examined what TDPs were
charging in November, we found that the median prices compared
to the VA were 48 percent higher for the top 20 drugs used by
seniors. If Medicare brought that negotiating power that the VA
has to Medicare, we would see some comparable savings in line
with that.
Finally, we have seen that prices have continued to
increase. We have looked at the top 20 drugs. We have seen a
similar increase that really is in almost lockstep with average
wholesale price since November. This means that plans are
simply passing on any inflation they see to consumers, which
suggests they are not seeing the kinds of savings that we had
hoped they might see but have not so far.
I want to thank the Subcommittee for the opportunity to
present this testimony and am happy to take questions.
[The prepared statement of Mr. Steinberg follows:]
Prepared Statement of Mark Steinberg,
Senior Health Policy Analyst, Families USA
Families USA thanks the Subcommittee on Health of the Committee on
Ways and Means for the opportunity to submit testimony on the
implementation of Medicare Part D, Medicare's prescription drug
benefit. Our testimony focuses on three concerning aspects of
implementation: enrollment in the low-income subsidy; the drug prices
charged by the participating drug plans; and the transition of dual
Medicaid/Medicare eligibles from Medicaid to Medicare drug coverage.
Disappointingly Low Enrollment in the Low-Income Subsidy
For those who qualify, Part D's low-income subsidy (``LIS'') is
potentially a very valuable help. Unfortunately, enrollment in the
program has been a deep disappointment. According to the most recent
data available from the Social Security Administration (``SSA''), only
about 1.6 million of the estimated 7 to 8 million eligible
beneficiaries have been signed up--fewer than one-fourth of those who
qualify.
CMS has recently taken a positive step by announcing that those who
enroll in the LIS after May 15 will be able to join a Part D plan at
that time, rather than waiting for the next open enrollment period.
These beneficiaries, however, will be responsible for at least a
partial late-enrollment penalty. Nevertheless, the potential for
additional enrollment after May 15 makes it very important that SSA and
other organizations, including State Health Insurance and Assistance
Programs (SHIPs) continue their outreach and enrollment efforts
throughout the year. One-on-one counseling such as that provided by
SHIPs can be very effective, but it requires the investment of
substantial time and financial resources. Congress should insure that
SSA and the SHIPs have all the resources they need to fund aggressive
outreach. At least one recent report suggested that SSA may be under-
equipped for its responsibilities.\1\
---------------------------------------------------------------------------
\1\ Email from Linda McMahon, Deputy Commissioner of Operations for
Social Security, to Social Security Administration Operations
employees, January 21, 2006.
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In addition, changes to the LIS rules could ease the enrollment
process. Eliminating the asset test entirely would go a long way
towards streamlining eligibility determinations. It would also help
those needy beneficiaries with limited incomes but who have managed to
save a modest amount over their lifetimes. Short of a complete
elimination of the assets test, Congress should make two simpler
changes that would help the process by clarifying that: 1) the cash
value of life insurance should not count as an asset; and 2) in-kind
support (such as housecleaning by an adult child) should not count as
income. These two questions slow the enrollment process and create
additional burdens on beneficiaries.
Concerns About Plan Drug Prices
The third issue that we would like to raise is related to drug
prices and price stability across participating Part D plans (PDPs).
While this is not an issue limited to program implementation, any
failure of the plans to obtain significant price discounts and pass
those discount on to enrollees, as well as any failure to contain drug
price inflation, has long-term implications for program costs to
taxpayers and beneficiaries.
Under the law, the government is prohibited from negotiating for
lower drug prices on behalf of Medicare beneficiaries on the premise
that, through competition, the plans will obtain discounts comparable
to any the government could. This assumption has not proven out.
Plans are not required to publicly report the drug prices they
negotiate with manufacturers--which may well be quite low. The Medicare
drug plans do, however, report the drug prices they are charging to
beneficiaries. Those prices are significantly higher than the prices
the government currently negotiates with drug manufacturers through the
Department of Veterans Affairs. In fact, a Families USA study of
November PDP prices for drugs frequently prescribed to seniors found
that the lowest PDP price was in nearly all cases significantly higher
than the lowest price negotiated by the Department of Veterans
Affairs.\2\ That study found the median price difference to be 48.2
percent. If the government were allowed to negotiate drug prices for
the Medicare program, given the size of the Medicare population and
their heavy prescription drug use, it should be able to achieve prices
at least as low as those the Department of Veterans Affairs currently
negotiates.
---------------------------------------------------------------------------
\2\ Dee Mahan, ``Falling Short: Medicare Drug Plans Offer Meager
Savings,'' (Washington, D.C.: Families USA, December 2005).
---------------------------------------------------------------------------
The drug prices charged by PDPs have a direct impact on
beneficiaries, specifically those who do not qualify for extra help.
Plan prices are used to determine when an enrollee meets the
deductible, reaches the gap in coverage (the ``doughnut hole''), and
reaches catastrophic coverage and is eligible for higher government
subsidies for the rest of the year. These are also the prices that
enrollees must pay out-of-pocket during the ``doughnut hole.'' PDPs'
failure to negotiate low prices also has implications for premium
increases in subsequent years. As a result, high PDP drug prices mean
more costs to beneficiaries and to the program.
However, it is not just high prices that raise concerns. Plans can
change the prices that they charge for prescription drugs at any time.
Since the start of the program, many plans have increased drug prices,
in many cases these increases have been in tandem with increases in
manufacturer prices.
In the five months from November 15, 2005, when individuals could
start enrolling in drug plans, to April 15, 2006, the median PDP price
increase for frequently prescribed drugs was 3.7 percent.\3\ While
there was considerable variation in price changes between individual
plans, the median price change across all PDPs was nearly identical to
manufacturer increases in average wholesale price. Beneficiaries are
locked into a plan for a year, yet cannot rely on any sort of stability
in that plan's drug prices, which are a key factor in plan selection.
Furthermore, as long as the plans are routinely raising prices in line
with manufacturer price increases, they are not exerting any bargaining
clout that can offer consumers protection from continuing drug price
inflation.
---------------------------------------------------------------------------
\3\ Based on a Families USA analysis of PDP mail order prices from
November 15 to April 15 for all plans operating in Regions 5 (Delaware,
Maryland and DC) and 14 (Ohio). The analysis looked at the twenty drugs
most frequently used by seniors, as outlined in Families USA's report
``Falling Short'' (See Footnote 4 for a citation to that report). PDP
price changes for those drugs were compared to changes in manufacturer
average wholesale price (AWP) for the same time period. For 19 of the
20 drugs, the median percent change in PDP price was equal to any
change in manufacturer AWP. For one drug, the median PDP price
increased absent any manufacturer price increase.
---------------------------------------------------------------------------
Allowing the government to negotiate directly with manufacturers
could both lower drug prices and bring price stability to the program.
This would benefit beneficiaries and reduce overall program costs to
taxpayers.
A Difficult Transition for Dual Eligibles
Dual eligibles are Medicare's most vulnerable beneficiaries. These
6.3 million low-income seniors and people with disabilities are the
only beneficiaries whose drug coverage was disrupted directly as a
result of the start of the Part D program. Under the law, dual
eligibles who did not select a drug plan before January 1, 2006 were to
be automatically enrolled in a Part D plan selected at random, without
regard to their specific drug needs. Prior to the start of the program,
state Medicaid officials, advocates, and others expressed deep concerns
about the ability of CMS and the other involved players to implement
smoothly a transition of this magnitude.\4\
---------------------------------------------------------------------------
\4\ See, e.g. Vernon Smith, et al., A Medicaid Perspective on Part
D Implementation; The Medicare Prescription Drug Program (Washington,
Kaiser Commission on Medicaid and the Uninsured, December 2005); Andrea
Cohen, et al. MMA and Dual Eligibles: A Transition in Crisis (New York:
Medicare Rights Center, March 2005).
---------------------------------------------------------------------------
Unfortunately, these concerns proved well-founded. Thousands of the
neediest beneficiaries were unable to obtain essential medications
during the first months of the program. Problems with data exchanges
between states, CMS, Part D plans, and pharmacists made it impossible
to determine which plans dual eligibles were enrolled in, and what
their cost-sharing should be. Ultimately, at least 44 states and the
District of Columbia stepped in to respond to the emergency and use
their old Medicaid system to provide a flow of medications to dual
eligibles. CMS agreed in late-January to reimburse states for their
expenses, although as of this writing, states have not yet been
compensated.
Although some of the most egregious technical problems are easing,
glitches remain. The basic structure of the Part D program will
continue to create barriers for dual eligibles that will make them
worse off than they were under Medicaid. First, in about half the
states, co-payments for dual eligibles are higher than they were under
Medicaid. Second, dual eligibles must now navigate formularies and
utilization management rules that are generally much more stringent
than preferred drug list policies under Medicaid. Many duals will
likely continue to encounter problems obtaining needed drugs. The HHS
Inspector General found, for example, that 30 percent of dual eligibles
were assigned to plans that covered less than 85 percent of the most
commonly used drugs.\5\ Although dual eligibles can change plans
monthly, finding a plan that comes closest to meeting their needs
continues to be a daunting task, especially for those with cognitive
impairments or complex medical needs.
---------------------------------------------------------------------------
\5\ Office of the Inspector General, Dual Eligibles' Transition:
Part D Formularies' Inclusion of Commonly Used Drugs, OEI-05-06-00090
(Washington: U.S. Department of Health and Human Services, January
2006).
---------------------------------------------------------------------------
We believe that taking action to deal with the issues and problems
outlined in our testimony would be significant steps towards correcting
some of the many issues that have arisen related to Medicare Part D.
We thank the Subcommittee for the opportunity to present this
testimony.
Chairman JOHNSON OF CONNECTICUT. Thank you, Mr. Steinberg.
Ms. Gottlich.
STATEMENT OF VICKI GOTTLICH, SENIOR POLICY ATTORNEY, CENTER FOR
MEDICARE ADVOCACY
Ms. GOTTLICH. Thank you, Madam Chairman, Mr. Stark, and
Committee Members for the opportunity to testify today. I am
Vicki Gottlich, a senior policy attorney in the Washington,
D.C. office of the Center for Medicare Advocacy. The Center is
a national, nonpartisan educational and advocacy organization
headquartered in Connecticut. We represent thousands of
individuals in Medicare appeals, respond to calls and e-mails,
and provide support to CHOICES, the Connecticut State health
insurance assistance program.
Our written comments include examples of individuals such
as the person from Florida who is not getting his HIV/AIDS
drugs, who face problems that should not happen under CMS
guidance. They do happen. The amount of time it takes to
resolve problems is enormous, and not all problems can be
resolved.
CMS refuses to look at systematic issues, even though
acting on systems issues might be the best way to resolve an
issue. I would like to start with our client, Mary F. from
Wilimantic. SSA told Mary that she was awarded the full, 100
percent low-income subsidy. However, CMS told her plan that she
had a partial subsidy, meaning she has to pay 15 percent
copayments. The Center got involved. We worked with CMS. We
thought the issue was resolved, yet, last week, Mary was asked
to pay a 15 percent copayment for a new drug again. She is a
low-income individual. She cannot afford to do this.
Additionally, she has been told that it may take up to 10 weeks
to reimburse her for the payments that she has already paid in
excess of what she should be paying. She cannot afford do this.
Mary is not the only one who has encountered programs, even
when they are working with the CMS caseworkers Dr. McClellan
described in his testimony yesterday. Yesterday, we heard from
a 44-year-old dual eligible individual from Illinois who told
us that he had been auto-enrolled in a plan in December, then
disenrolled and reenrolled so many times that he does not have
drug coverage. He actually has contacted the plan, CMS, and
SSA; been working with them; but each program blames the other,
and the problem is not fixed. He has no drug coverage. He has
to pay $229 for drugs out of his $710 a month income. He is not
better off.
We also heard yesterday from a woman in Oceanside,
California, whose autistic daughter, a dual, now must pay
copayments she cannot afford to pay. She is one of the 1
million California dual eligibles who have to pay copayments
for their drugs for the first time. In addition to the issue of
copayments for dual and increased costs for duals, our written
testimony talks about the Office of Inspector General study and
talks about studies for California Health Foundation, which
indicate that the drug coverage in Part D plans to which duals
have been assigned is not extensive and does not cover the
drugs that they need.
For some dual eligibles, enrollment in Part D means they
may lose other health coverage. The Connecticut Department of
Social Services (DSS) asked the Center last week about duals
and their dependents who are losing retiree health coverage as
a result of their auto-enrollment in a Part D plan. DSS said
auto-enrollment results in a loss of access to health care for
the duals, uninsured status for some family members, and
increased cost for the State, since Connecticut will lose
private insurance coverage to offset Medicaid.
I was interested, Madam Chairwoman, in your comments about
the sixth-graders who are enrolling people in the plans,
because I have also had the opportunity to enroll people in
plans. It takes me at least an hour and a half to go through
the Medicare Website, because you cannot just look at the
lowest costs. You have to look at utilization management tools,
prior authorization, quantity limits, step therapy, which are
not easy to find. In addition, once you go through the Web
finder, you have to contact the plans, and we are finding
information we get from the plans is not always the same as the
information on the Web.
Then, there are problems that we outline in our testimony
about the exceptions process. The Center is one of the groups
that worked with the American Medical Association and America's
Health Insurance Plans to develop the standard forms. We are
hopeful, but we understand that CMS guidance on these issues is
not mandatory, and therefore, we are concerned that plans will
not comply, which is really what happened with the transition
process in the beginning of the year. We have followed CMS'
guidance and reported the problems we encountered with plans to
CMS.
What we are really concerned is that CMS may not take any
action against the plans. We would very much like Congress to
ensure that CMS exercises its enforcement authority against
some of the bad actors that we have seen: plans that do not
cover drugs that are in the six required classes of drugs;
plans that interpret a 72-hour exception deadline as 72
business hours; plans that ignore requests for coverage
determinations; plans that require doctors to fax a request
form to get a request form so that they can get the exception
request form that they need to start the appeals process.
Our written testimony includes numerous recommendations to
various issues that we raise. Our overall recommendation is to
include in Part D a single standard Medicare prescription drug
benefit, administered by Medicare that is uniform nationwide.
Thank you again.
[The prepared statement of Ms. Gottlich follows:]
Prepared Statement of Vicki Gottlich,
Policy Attorney, Center for Medicare Advocacy
I am Vicki Gottlich, a Senior Policy Attorney in the Washington,
D.C. office of the Center for Medicare Advocacy, Inc. (the Center).
Thank you for the opportunity to testify at the continuation of the
hearing on the Implementation of Medicare Part D.
Founded in 1986, the Center is a national, non-partisan educational
and advocacy organization that identifies and promotes policy and
advocacy solutions to ensure that elders and people with disabilities
have access to Medicare and quality health care. The Center's national
office is in Connecticut, with offices throughout the country,
including Washington, D.C. The Center represents thousands of
individuals in Medicare appeals each year, responds to calls and e-
mails from individuals in Connecticut as well as from all across the
United States, and provides support to CHOICES, the Connecticut state
health insurance program. Requests to the Center for assistance have
increased exponentially with the advent of Medicare Part D.
The White House and the Centers for Medicare & Medicaid Services
(CMS), in their efforts to promote Part D, proclaim that ``the new drug
program is working well for most seniors (sic) and pays nearly all of
low-income beneficiaries' drug bills.'' See, e.g., ``The Medicare
Prescription Drug Benefit: Helping Seniors and Reducing Costs,'' a Fact
Sheet issued by the White House on March 14, 2006.
What they do not say is that many of the beneficiaries encountering
problems are dually eligible for Medicare and Medicaid (dual
eligibles). The barriers to their getting drugs that were previously
paid for by their Medicaid programs are not temporary glitches but
result from the very design of the Part D program. The Center avers,
based on our conversations with Medicare beneficiaries, their families
and their advocates, that this most vulnerable population is, as a
whole, much worse off than they were before they were shifted from
Medicaid to Medicare drug coverage.
Problems and recommended solutions include:
1. Dual eligibles have been randomly assigned to average-cost
prescription drug plans, most of which do not cover all drugs commonly
used by this population.
To ensure no gaps in coverage when dual eligibles transition
from Medicaid drug coverage to Medicare drugs coverage, the Medicare
Modernization Act provides for them to be randomly assigned to plans if
they do not choose a plan on their own. Random assignment benefits Part
D drug plans by guaranteeing them an equal portion of the enrollment of
the dually-eligible population, without burdening them with too large a
portion. Random assignment does not, however, benefit beneficiaries.
The Inspector General of the Department of Health and Human
Services has determined that nearly one-third of dually eligible
beneficiaries--a highly vulnerable population with unusually high
medication needs--were assigned to drug plans that included less than
85% of the 178 most commonly used Part D drugs.\1\ Some of the drugs
excluded from a substantial number of plan formularies (lists of
covered drugs) are drugs for high blood pressure, high cholesterol and
pain relief.
---------------------------------------------------------------------------
\1\ Office of Inspector General, ``Dual Eligibles'' Transition:
Part D Formularies' Inclusion of Commonly Used Drugs,'' (OEI-05-06-
00090 January 2006).
---------------------------------------------------------------------------
Only 18% of beneficiaries were assigned to plans that covered
all 178 drugs, but this does not mean that even these plans cover all
drugs needed by each beneficiary--only that they cover the most
commonly used drugs. Moreover, even plans that cover all drugs may have
quantity limits, prior authorization and other barriers to immediate
and full coverage of an individual beneficiary's prescription drug
needs.
Other researchers came to similar conclusions after reviewing
formularies of plans available in specific regions. For example,
Jocelyn Guyer and Jeffrey S. Crowley of the Georgetown Health Policy
Institute wrote a series of three policy briefs for the Connecticut
Health Foundation. They found large variations in the extent to which
the 44 stand-alone prescription drug plans available in Connecticut
covered medications, with major and frequent shortcomings in coverage
of critical drugs used by dual eligibles.\2\
---------------------------------------------------------------------------
\2\ The policy briefs are available at www.cthealth.org. Judith
Stein, Executive Director of the Center, was a research contributor to
the policy brief on Implications for dual eligibles.
---------------------------------------------------------------------------
A 33 year-old beneficiary from Orange Part, Florida, described
the difficulties experienced by dual eligibles in an e-mail sent to the
Center last week: \3\
---------------------------------------------------------------------------
\3\ Beneficiary comments are verbatim and may contain grammar
mistakes.
I have been on Medicaid since 1996, and Medicare since 1998.
I get Social Security Disability, and I am below the poverty
level. Since Medicare Part D., has kicked in. I have had to pay
for medicines that Medicaid used to pay for, now I'm
responsible for the co-pays of my medicines. I am a kidney
transplant patient and have been a diabetic for 30 years. I
also have been diagnosed with HIV in 2001. I can't pay for my
medicine copays, because I make approximately $8,500 a year.
Even with the ``extra help'' that I get from Medicaid, I still
have to pay about $40 a month for medicines. However, my
medical insurance doesn't cover my transplant medications or my
HIV medications. These medicines cost about $400, a month. What
has the president done? Is there a plan to kill off the elderly
and sickly, or do we just have to suffer the consequences?
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Thank you for letting me speak my peace.
Center for Medicare Advocacy Recommendation: In assigning
beneficiaries to plans they have not chosen, more attention must be
given to matching individual beneficiaries' drug usage and pharmacy
preferences with the formulary and pharmacy networks of individual
plans.
2. Getting coverage for drugs that are not on a plan's
formulary involves engaging in one of several complex
processes. The frailty of this population, including a high
incidence of cognitive impairments, makes navigating those
processes more difficult than for other beneficiaries.
Applying for an Exception. Each plan must have a process for
enrollees to ask for an exception to non-coverage, and each plan's
process is different. The Center is part of a group, spearheaded by the
American Medical Association (AMA) and working in conjunction with
America's Health Insurance Plans (AHIP), that has developed a model
exceptions request form. Although CMS has posted the model form on its
website, and AHIP members may post the form on their websites, CMS does
not require the form to be used by the plans.
An exception request must include a doctor's statement that all
drugs on the formulary are either less effective or harmful to the
beneficiary or both. Some plans are requiring the submission of
clinical notes verifying such assertions. Because each plan's process
is different, physicians must deal with multiple processes to serve all
their patients. Some doctors are charging for completing prior
authorization and exception request forms. Dual-eligible beneficiaries
who cannot pay even nominal fees for this service cannot avail
themselves of the exceptions and appeals processes.
The problems that arise from trying to navigate the exceptions
process are almost too numerous to include in testimony. The issues
brought to our attention by Medicare beneficiaries, their families, and
their advocates include:
Not knowing that there is a process to request an
exception or coverage determination;
Not getting through to customer service offices;
Customer service offices not being available to
accept emergency calls from doctors outside of normal business
hours;
Not having the exception request treated as an
exception because the beneficiary did not use the proper term;
Having to fax or mail to a plan a preliminary request
form in order to get the request form that will start the
coverage determination process. Without a coverage
determination a beneficiary cannot file an appeal;
Plans not complying with statutory timeframes;
Plans not forwarding cases to the independent review
entity as required when time frames are not met;
The independent review entity failing to conduct a
new, independent review of the medical evidence.
Changing prescriptions. Plans encourage enrollees to change from
an uncovered drug to one on their formulary. Such a change presumes
that there is a drug on the formulary that would work as well as the
uncovered drug. Making such a change may involve multiple visits to a
doctor's office, each of which may cost money in terms of
transportation and office visit co-pays, for the doctor to first
prescribe, and then monitor, use of the alternate drug. Duals often do
not have the resources to pay for the transportation or the cost-
sharing for such visits. Since many use clinics, they may not be able
to get an appointment with a doctor before their medication runs out.
Changing to a plan that covers the drug in question. Unlike most
Medicare beneficiaries, dually eligible beneficiaries are allowed to
change plans whenever they want to, with their new coverage effective
the month following their action to change. Changing plans, however, is
difficult and not without risks. First, the number of average cost
plans in each region ranges from six to eighteen and the systems
available to help beneficiaries know what each plan covers require
access to high speed Internet service and a printer. Few dual-eligibles
use the Internet, so to make use of these decision supports, a
beneficiary must generally get help from someone else. The programs
that are funded to counsel beneficiaries are overwhelmed by people
needing such assistance and by the many difficulties that have arisen
during the first months of the program.
Moreover, processing new enrollments in a plan is complex,
requiring communication between the old plan, CMS, the new plan, and
another government contractor. The information takes days to weeks to
run through the system; a change made toward the end of the month will
not show up in the system until later the following month, making it
difficult to purchase drugs in the first part of the month.
Finally, plans can change the drugs on their formularies at any
time, with 60 days' notice to individuals taking the drugs in
question.\4\ Even an intelligent choice of a plan covering all of a
beneficiary's current drugs could be for naught, if the plan removed
some or all of those drugs from its formulary two months later. An
April 27, 2006 Memorandum from Abby Block of CMS to Part D Sponsors,
``Formulary Changes during the Plan Year,'' suggests that plans
continue to cover a drug for any plan enrollee who is currently taking
the drug even after the plan removes the drug from its formulary for
other enrollees. Unfortunately, this CMS Memorandum to exempt current
enrollees from formulary changes involving their current drugs is not
binding on any plans. This Memorandum, like the rest of the policy
guidance issued by CMS to implement much of Part D, has not gone
through the Administrative Procedure Act notice and comment rulemaking
process, and does not have the same legal effect as the statute and the
implementing regulations.
---------------------------------------------------------------------------
\4\ Note that the regulations specifically allow Part D plans to
change their formularies. 42 C.F.R. Sec. 423.120(b)(5),(6).
---------------------------------------------------------------------------
The consequences to beneficiaries are enormous, as these client
experiences demonstrate.
It was extremely stressful to get a plan picked out that
would even cover my medicines, I'm disabled not old and every
step of the way has been a battle. The insurance company
STINKS. I have to fight for nearly every prescription. From
getting the right generic to one they prefer. It's almost like
they are my doctor, not the insurance plan. I have had to go
the the ER several times becuase I was forced to wait or fight
for meds that would have helped. I also have athsma and now
they are denying my singulair, suddenly some crap about needing
pre-approval. This is some of the worst insurance ever.
Medicare Part D is one of the worst things the Bush
administration has done.
-- E-mail dated April 26, 2006, from a 35-year-old female in
Hawley, Minnesota.
My other half has AIDS and our pharmacist suggested that we
go with AETNA because it covers all his HIV meds as well as all
the other meds he's on. So we signed him up for it and now it
seems like each month they are not wanting to pay for certain
non-HIV medications. They want him to take something else. One
of those is to prevent him from getting pneumonia. It's
Bactrum. Their formulary on-line says they will pay for it, but
their letters keep saying they won't. After one month he's
already into the catastrohic coverage part because of all the
meds he's on. Every month it's a different story, a different
medication is being denied. What gives them the right to play
doctor with people's lives?
-- E-mail dated April 26, 2006, from a 42-year-old male in Land o'
Lakes, Florida
Center for Medicare Advocacy Recommendations:
(1) Exceptions processes should be uniform for all plans, with
a single form made available to all physicians and pharmacists;
(2) Plans should be prohibited from removing drugs from their
formulary during the plan year;
(3) More money should be made available to programs that
provide individualized assistance to beneficiaries.
3. Plans' transition policies have been difficult to get and
difficult to enforce at the pharmacy level.
Each plan is required to have a transition process to address
the situations of new enrollees who are taking drugs not on the plan's
formulary. The transition policies include special focus on the needs
of dually eligible beneficiaries. While issues with transitions have
been prominent in the early months of Part D because the entire program
was ``transitioning'' into existence, transitions will occur every
month as new enrollees join plans, and especially every January, after
major plan shifting has occurred during the annual enrollment period in
November and December.
CMS asked plans to extend the transition coverage of non-
formulary drugs through the end of March, so that beneficiaries could
get a 90-day supply. Such an extension was voluntary on the plans'
part. And, even after the extension request, dually-eligible and other
beneficiaries are coming away from the pharmacy with no prescription,
or with just a few days' supply of pills.
Moreover, the transition is merely to allow the beneficiary to
change drugs, change plans, or request an exception so that her drug
can be covered even though it is not on the formulary. But many
beneficiaries are not receiving the notices they are supposed to get
telling them what they should do next. For example,
Center staff spent many hours during February and March 2006
helping a woman in California get coverage of a prescription
that she had been taking for 35 years for a chronic condition.
(Part of the problem was that the plan could find no record of
her enrollment until mid-February.) She contacted us last week
to say that, although she had received the prescription in
February and March, the plan was once again telling her that
the drug was not covered. We suspect that she got the drug in
February and March under the transition process, and now the
plan wants her to go through the exceptions process--again--to
get her medically necessary drug.
A 58-year old male from Jellico, Tennessee commented to the
Center via e-mail about the transition process:
I Called First Premier Health (my Provider For Part D to see
if All My Medications Were Covered before I Signed on With
Them, They Assured Me They Were, After 2 Month's They Wrote Me
A Letter Saying that My (Pravachol) Was No Longer Covered, I
Had to Try Alternative Meds First, Hell I've Tried Them All,
Pravachol Works The Best For Me, I've Been On It For Over 4
Years Now!! This Does Not Make Any Sense!!! Thank You!! I Have
Always been Taught When Something Works Real Well For You, Stay
With It!!!!
Center for Medicare Advocacy Recommendations:
(1) Transition policies should be uniform across plans and
easily made known to beneficiaries and pharmacists;
(2) Plan call lines, for pharmacists to get instruction to
override codes, should be required to operate 24 hours a day,
seven days a week;
(3) CMS should enforce contract requirements of plans.
4. Dually eligible beneficiaries using long-term care services
are treated differently depending on where they receive the services.
Dually eligible beneficiaries are provided the best Part D
subsidy available under the law. They pay no premium (for an average
cost plan) or deductible, have no coverage gap (doughnut hole) and no
cost-sharing at all after they reach the catastrophic coverage
threshold. Their co-payments vary from $0 to $5, depending on income or
place of residence.
Dually eligible beneficiaries residing in nursing homes and
certain other institutions have no co-payments, since they pay all but
a very small amount of their income over to the institution that is
caring for them. Dually eligible beneficiaries who are getting their
long-term care services in assisted living facilities, board and care,
and other similar community settings, however, are treated differently
and may have co-pays as high as $5 per prescription (for typically more
than 10 prescriptions), even though they, too, must pay most of their
income to their care provider and even though their care needs are
similar to those of nursing home residents.
Center for Medicare Advocacy Recommendation: All dually eligible
beneficiaries receiving long-term care services should be treated
similarly and should have no cost-sharing obligations, since most of
their income is given over to the provider of service.
5. Dually eligible beneficiaries have lost Medicaid as secondary
coverage.
The most common interrelationship between Medicare and Medicaid
is that Medicare is the first payer for services and Medicaid picks up
where Medicare coverage stops. This is not true under Part D. Medicaid
is prohibited from paying for drugs that are covered by Part D. For a
state to provide the kind of ``wrap around'' coverage that is typical
for other services, it must use its own money, without any federal
contribution. According to the Inspector General of the Department of
Health and Human Services, only four states have indicated they will
provide some kind of coverage for drugs that are not on a Medicare
plan's formulary.
Part D imposes prescription drug co-payments for the first time
on a substantial number of dual eligibles, including the 1 million dual
eligibles in California (approximately one-sixth of the dual eligible
population). While the co-payments for duals are supposed to be
minimal, for someone living on $817 (100% of the federal poverty level
for an individual) or less each month, $3 per prescription is a
fortune. As a beneficiary from New York wrote to the Center recently,
she lives on Social Security disability benefits and cannot afford to
pay the $3 co-payment every time she goes to the pharmacy. In addition
to California and New York--Florida, Texas and Illinois, which also
have large dual eligible populations, are not providing any assistance
with co-payments.
Even when states pay co-payments for duals, the systems do not
always work. Despite the fact that Connecticut has legislated coverage
of Part D co-payments for duals, a nurse from Marlborough, Connecticut
writes that her mental health clients are still being charged co-pays.
I AM TRYING TO GET SPECIFIC INSTRUCTIONS FOR THEM TO BRING TO
THE PHARMACY TO RESOLVE THESE ISSUES. SOME ARE TOO COGNITIVELY
IMPAIRED TO DO THIS ON THEIR OWN.
For some dual eligibles who previously qualified for Medicaid on
a ``spenddown'' basis, the advent of Part D means they will lose all of
their supplemental health coverage.
A 60-year old client from Milford, Connecticut, who has
Hepatitis C, has long alternated between Medicaid and ConnPACE,
the state pharmacy assistance program, to help with
prescription costs during his spenddown periods. He takes
several very expensive medications and qualifies for the low-
income subsidy. In fact, prior to Part D, when the entire cost
of his medication--including the portion paid by ConnPACE--was
applied against his spenddown, he usually met his spenddown
obligation in less than one month. With the advent of Part D,
only that portion which he pays--his $2 and $5 LIS co-pays--
will count against his spenddown obligation. Our client
correctly perceives that he will probably never meet his $3,000
spenddown obligation at this rate. He currently is in need of
an expensive medical test that he cannot afford, and is having
difficulty finding a provider who will accept him as a patient
as he no longer has Medicaid coverage and is unlikely to obtain
it in the future.
For other duals, enrollment in a Part D means loss of all of
their retiree health coverage, not just their drug benefit. A worker
from the Connecticut Department of Social Services contacted the Center
last week because dual eligibles are being notified that they and their
dependents have lost retiree health coverage as a result of their auto-
enrollment in a Part D plan. The worker wrote in her e-mail:
In addition to the issue of health care access for our
recipients, former recipients, and dependents thereof, there
are fiscal implications for DSS. Generally, DSS likes to use
private insurance to offset Medicaid expenses. Using the
automated process to enroll dual eligibles in Medicare D for
recipients who have ``creditable'' prescription coverage is
costly DSS.
Center for Medicare Advocacy Recommendation:
(1) Amend the law to provide dual eligible coverage for
prescription drugs, just as it exists for other health care
services, including federal matching funds for state
expenditures;
(2) Amend the law to allow Part D drug costs, including the
low-income subsidy, to count toward Medicaid eligibility based
on spenddown.
(3) Amend the law to protect duals and their families from
loss of retiree health coverage as a result of enrollment in a
Part D plan.
6. Individuals with Medicaid will experience a gap in
prescription drug coverage when they first become eligible for
Medicare.
Individuals with Medicaid lose their Medicaid drug coverage on
the first day of the month that they become eligible for Medicare, even
if they have not enrolled in a Part D plan. The state will transmit
information about them to CMS when the state becomes aware of their new
dual eligibility status. It is unclear, however, whether and when
states will have that information. In addition, states often send
information to CMS about new dual eligibles only once a month,
generally at the end of the month. CMS may not be able to enroll a new
dual into an eligible plan in time for drug coverage to begin the
following month. CMS has indicated that Part D coverage will be
retroactive, but it is unclear how duals will pay for their
prescriptions while coverage and plan enrollment is being determined.
New dually eligible individuals can use the Point of Service
(POS) option at the pharmacy that facilitates enrollment into the point
of service contractor. The contractor will then inform CMS so that the
individuals can be enrolled into a plan. Under the POS option, the
pharmacy distributes a 14-day supply of medicine to the individual,
with the possibility of an additional 14-day refill. Individuals who
try to get prescriptions under this option at the beginning of a month
may not have sufficient medicine to last until they are enrolled in a
Part D plan.
Center for Medicare Advocacy Recommendation: Identify Medicaid
recipients who are about to become Medicare eligible sufficiently in
advance to auto-enroll them in a Part D plan before they lose Medicaid
drug coverage. Alternatively, continue Medicaid drug coverage for these
individuals until they are enrolled in a Part D plan.
Conclusion
Many of the problems and issues described above arise from or are
complicated by the number of plans available and the fact that each
plan has its own design, including formulary, transition processes,
exceptions and appeals processes. Virtually no uniformity exists or is
required.
Even after beneficiaries, their families, and their advocates spend
hours and days on the phone trying to resolve issues with their Part D
plans and with CMS, there is still no guarantee that the problem will
be resolved. Our client, Mary F., from Willimantic, Connecticut,
exemplifies the problem.
Mary F. gets by on limited income, and it is not unusual at
the end of any month that she is down to her last $5 in
quarters for her laundry. She takes several medications, among
them a pain reliever for severe gout. She is on ConnPACE and a
Medicare Savings Program. She has documentation that she was
awarded the full 100% low-income subsidy, and thus should be
paying $2 or $5 for co-pays. However, Medicare has informed her
plan that she qualifies for a partial subsidy, with 15% co-
pays. Mary cannot afford to pay even ConnPACE's $16.25 co-pays
and, therefore, has gone without a new pain medication her
physician prescribed a week ago. She is owed over $70 in co-pay
overpayments to her pharmacy and has been told it may take up
to 10 weeks to be reimbursed. Despite repeated efforts on the
part of the Center, as well as CMS's intervention in this case,
the problem persists.
A Connecticut resident said it best in an e-mail from April 29,
2006:
I am on Ruby1 Healthnet subscriber. In 2\1/2\ months I have
already used up my Medicare Part D. I will have to pay $3349.56
out of pocket, before I qualify for Catastrophic Coverage. What
a scam!!, another way to get into the middle class' pockets.
Overall Center for Medicare Advocacy Recommendations: Create a
single, standard Medicare prescription drug benefit, administered by
the Medicare program, that is uniform nationwide. Require CMS to
oversee the program with mandatory due process standards.
Thank you for the opportunity to submit this written statement. We
look forward to working with Congress to ensure that elders and people
with disabilities have access to a meaningful and affordable Medicare
prescription drug benefit.
Chairman JOHNSON OF CONNECTICUT. Thank you.
Mr. Vaughan.
STATEMENT OF BILL VAUGHAN, SENIOR POLICY ANALYST, CONSUMERS
UNION
Mr. VAUGHAN. Thank you, Madam Chairman, Members of the
Subcommittee. If I could have my full statement put in the
record, I would deeply appreciate it.
Consumers Union is the independent, nonprofit publisher of
Consumer Reports. We do not just test toasters; we try to help
people with what are safe drugs and good insurance policies,
and we do strongly support some major reforms of Part D, as my
first paragraph in the written statement details.
Pending major reforms, there are several key issues that
would help make the program work better for consumers. We think
the key to improving the current program is to make public the
quality information that CMS should soon receive from the
plans. This information starts coming in in 27 days, at the end
of May.
The required reporting is all detailed in manuals sent to
the plans last April and finalized this January. It is about a
12-14 page document that lists just all kinds of data that will
be at CMS. Making this data public will let consumers make
informed choices when selecting a plan, and this is
particularly important this fall and next fall, when we are
likely to see a lot of consolidation of plans. Give consumers
information, and they will walk away from the poor plans and
reward the good ones.
CMS is to be congratulated for requiring an extensive set
of data and proposing even more data for next year. Yet, data
collected but not made public does nothing to empower
consumers. The attachments to my testimony detail our efforts
to nail down what data will be available and when, and we thank
CMS for working on this at a very high level with us. On April
25, we received a letter, and it is attachment number three in
my statement with the CMS logo on it, and I would urge you to
look at the bullet points in that letter. Frankly, they are
kind of disappointing. The first bullet, the call center data,
will be interesting, but the other three bullets mentioned in
the letter seem, well, frankly kind of givens. Of course, those
other three items should be happening, or a plan should not be
allowed to continue in the program.
So, therefore, we urge the Subcommittee to request that in
addition to call center performance data that CMS make
information public as soon as possible on the generic dispense
rate, the number of grievances and appeals filed per thousand
people, the resolution of those, pro or con the consumer, and
the number of prior authorizations, step therapy, tier, and
nonformulary exception requests received per thousand
enrollees. That would really help consumers.
We are not asking for new data. This is information that
Medicare is already scheduled to collect starting at the end of
the month. We are simply asking that it be made public.
Switching subjects, we are pleased that the Administration
frequently mentions, as Dr. McClellan did yesterday, Consumer
Union's efforts to educate the public about safe, effective,
and lower-cost generic drugs. This is part of our
BestBuyDrugs.org campaign, and I have attached a sample of that
work at the back of my statement. We hope you will let your
constituents know about it. It is a free service, free, really
good stuff. If you would like samples for a town meeting or
event, we would be happy to provide them.
As the Administration says, if people aggressively use
these kinds of shopping guides, they can save thousands and
thousands of dollars. That is true, whether you are in Medicare
or out of Medicare, whether you are a 20-year-old or a 64-year-
old, it does not matter. You can save a lot of money through
the aggressive use of generics.
CMS is to be commended for its recent guidance designed to
stabilize formularies while encouraging the move towards
generics. No action was taken, however, on the serious problem
in many plans of constantly changing costs of drugs that are on
the formulary. We think consumers need to be told more clearly
that if they enroll in a percentage copay plan, they are likely
to see a great deal of instability.
We have been monitoring five drugs in five ZIP Codes in big
States for the last four months and are pretty shocked by the
amount of movement. Sometimes, it is downward, which is great
for consumers. Sometimes, it is up. There is a lot of movement,
and I think a lot of seniors will feel that is a kind of ``bait
and switch'' or ``gosh, why did I spend so much time shopping
when it keeps changing on me?''
So, if CMS could publicly say, ``In this plan, X percent of
the drugs changed during the last year,'' it would help people
select whether they want stability or whether they are willing
to have an adventure when they go to the drug stores.
Thank you very much for your consideration of these
recommendations.
[The prepared statement of Mr. Vaughan follows:]
Prepared Statement of Bill Vaughan,
Senior Policy Analyst, Consumers Union
Madame Chair, Members of the Subcommittee:
Thank you very much for the opportunity to testify.
Consumers Union, the independent, nonprofit publisher of Consumer
Reports,\1\ strongly supports major reform of the new Medicare
prescription drug program (Part D). We believe that the current
structure of the program will always be too confusing for seniors and
people with disabilities, and be subject to plan abuse and adverse
selection. We also believe that the program is too expensive for
beneficiaries, taxpayers, and future generations, and that we must find
a way to obtain lower-cost pharmaceuticals. Therefore, we support major
amendments to the law that would provide for the option of a Medicare-
administered, dependable, reliable, standard plan in which Medicare
negotiates (much like the Department of Veterans Affairs) to get lower-
cost pharmaceuticals.
---------------------------------------------------------------------------
\1\ Consumers Union is a nonprofit membership organization
chartered in 1936 under the laws of the State of New York to provide
consumers with information, education and counsel about goods,
services, health, and personal finance. Consumers Union's income is
solely derived from the sale of Consumer Reports and
ConsumerReports.org, its other publications and from noncommercial
contributions, grants and fees. In addition to reports on Consumers
Union's own product testing, Consumer Reports and ConsumerReports.org,
with approximately 6.5 million combined paid circulation, regularly
carry articles on health, product safety, marketplace economics and
legislative, judicial and regulatory actions that affect consumer
welfare. Consumers Union's publications carry no advertising and
receive no commercial support.
---------------------------------------------------------------------------
Pending those reforms, the key to improving the current program is
to give beneficiaries the quality information that CMS should already
be collecting from plans, so that consumers can make informed choices
when selecting a plan. New enrollees (e.g., people turning 65) should
have this information in order to make the best initial selection. All
beneficiaries should have this information to use in this fall's open
enrollment season (November 15-December 31, 2006) so that they can have
some comparative standards by which to judge the plan they chose (or
were auto-enrolled in). Making the full range of collected information
public is particularly important this first year, because Medicare has
not been able to start the consumer satisfaction survey called for in
the law.
CMS is to be congratulated for requiring an extensive set of data
from the plans. The first quarter of data must be reported by the end
of this month. The agency is also to be commended for proposing to
improve those data requirements for plan year 2007 (see attached letter
commenting on those proposed changes).
Yet data collected, but not made public, does nothing to empower
consumers.
On January 5, we asked CMS for information on exactly what data
would be made public and how soon. We thank CMS for a number of
personal, high-level meetings to explore how this should be done. On
April 25, we received a letter describing four issue areas where
information would eventually be made public. On May 1, we responded to
that letter (see attachments).
As our May 1 letter mentions, Consumers Union is encouraging
beneficiaries to report on their Part D experiences, good or bad,
though a `Share Your Story' website (http://www.consumersunion.org/
issues/medicaredrugs.html). We have received some reports of absolutely
abysmal service and quality. We hope to increase the number of stories
on that website to provide ideas for administrative and legislative
reform, and as guidance to consumers. But consumers need more than
anecdotes, they need the CMS's large database of quality indicators to
make the best decisions.
We urge the Subcommittee and Congress to request that in addition
to call center performance data, that CMS make information public as
soon as possible on:
the generic dispense rate;
the number of grievances and appeals filed per 1,000
enrollees;
the resolution, pro-consumer or anti-consumer, of
appeals;
the number of prior authorization, step therapy,
tier, and non-formulary exception requests received per 1,000
enrollees (Section VI of the January 25, 2006 Reporting
Requirements).
We are not asking for new data--this is information that Medicare
is already scheduled to collect, starting May 31st. We are simply
asking that this collected data be made public.
We are pleased that the Administration frequently mentions--as Dr.
McClellan did in his testimony before you yesterday--Consumers Union's
efforts to educate the public about safe, effective and lower cost
generic drugs. This is part of our BestBuyDrugs.org campaign. I've
attached a sample of that work. We hope you will let your constituents
know about this free service. As the Administration says, if people
aggressively use these kinds of shopping guides they can save thousands
and thousands of dollars--whether they are in Medicare, Medicaid,
uninsured, or in the private sector.
CMS is to be commended for its recent guidance designed to
stabilize formularies (while encouraging the movement toward generics).
No action was taken, however, on the serious problem in many plans of
the constantly changing cost of drugs that are on the formulary. And we
also think consumers need to be told more clearly that if they enroll
in a plan with a percentage co-pay, they are likely to see a great deal
of price instability. If beneficiaries want price stability during
their year of enrollment, then they should be strongly warned to join
plans with a set dollar co-payment (e.g., $10 per generic; $20 per
brand) and avoid plans that offer percentage co-payments (e.g., 20
percent of plan price for brand).
Each month this year we have monitored all the plans offered in one
zip code in each of five large states. Monthly, we have checked the
price of a consistent package of five commonly used prescription drugs
offered by 40-50 plans in these zip codes. Each month, we have seen a
lot of price movement: sometimes down (which is good for consumers),
sometimes up (which is disappointing). But we are continually surprised
by the number of changes and the price volatility. We believe that many
people sign up for a plan for a year and expect some dependability and
stability during that year. It would help consumers pick plans in
future open enrollment seasons if the degree of price increase (and
formulary) instability is documented (for example, of 1,000 drugs on a
formulary, 300 of them increased in price at one time or another). We
urge CMS to make this kind of data available to consumers before each
open enrollment season.
Thank you for your consideration of these recommendations.
__________
Attachment 1
April 3, 2006
The Honorable Mark McClellan
Administrator
Centers for Medicare and Medicaid Services
[email protected]
Washington, DC
Dear Dr. McClellan:
Thank you for the opportunity to comment on the Draft Medicare Part
D Reporting Requirements for Contract Year 2007, Updated 02/23/2006.
The key to all of these reporting requirements, of course, is that
they be made public both quarterly and annually so that Medicare
beneficiaries can have the latest information on the relative quality
of the different Plans and Sponsors so they can make informed
enrollment decisions. As per our letter of January 5, we continue to
hope that as much information as possible will be made public before
this fall's open enrollment season. All the reporting in the world will
do no good, if it just sits buried in CMS files.
Congratulations on the Draft for 2007.
It provides some major increases in the `granularity' or detail of
the 2006 data, and will help the public and advocates understand better
how the low income and most vulnerable are being served in the various
Plans. It will require important information on how well Plans deal
with transition formulary issues (clearly a major problem this winter).
The increased information about possible conflicts of interest in the
plan Pharmacy and Therapeutics (P&T) Committees is important and will
help ensure `good-for-patient formularies'--not just `good for Plan-
profits' formularies.
The addition of information on the `number of pharmacy transactions
rejected due to need for prior authorization' will be especially
helpful to consumers in understanding which Plans require the least
hassle--and which Plans to avoid.
The additional reporting requirements for Plan Call Centers are
excellent. The failure of Plan call centers is a major source of
frustration, and Consumers Union has received a number of complaints
about unbelievably poor service at these centers. Attached is one
example sent to us from a XXX enrollee. Enrollees in other Plans have
reported similar problems.
We suspect that you will receive comments from Plans opposing these
expanded reporting requirements. We hope you will stand firm with your
Draft proposal: far too many Plans have woefully failed to prepare for
and staff for the new benefit and they have contributed mightily to the
rocky start of this important program. They have not earned the
consumers' trust and therefore expanded reporting requirements are
totally in order.
Thank you for your consideration of these comments.
Sincerely,
William Vaughan
Senior Policy Analyst
Attachment example deleted:
__________
Attachment #2
January 5, 2006
The Honorable Mark McClellan, MD
Administrator
Centers for Medicare and Medicaid Services
Washington, DC 20201
Dear Dr. McClellan:
Consumers Union is interested in what information may be available
to consumers in the early fall of 2006 regarding the performance and
quality of various Medicare Part D providers (including MA-PD plans).
It would be a great help in our work if CMS could inform us exactly
what information will be available prior to the next open enrollment
period that will speak to consumer satisfaction, quality performance,
etc. For example, the law calls for consumer satisfaction surveys
(1860D-4(d)). Will they be conducted in 2006 and be made public before
the open enrollment period? If so, what satisfaction issues will be
measured?
In addition, the enclosed ``Final Medicare Part D Reporting
Requirements (Updated: 04/18/2005) lists a number of items that are to
be reported, with many of the first quarterly reports due at the end of
May. Will this data be made available publicly as it is received? If
not, what data will not be publicly released?
Thank you very much for your assistance in this request.
Sincerely,
William Vaughan
Senior Policy Analyst
__________
Attachment #3, CMS response to the above letter
Retyped copy of original letter, for inclusion in electronic file
CMS
DHHS
CENTER FOR BENEFICIARY CHOICES
Apr. 25, 2006
Mr. William Vaughan
Senior Policy Analyst
Consumers Union
1666 Connecticut Avenue, NW, Suite 310
Washington, DC 20009
Dear Mr. Vaughan:
Thank you for your inquiry on behalf of Medicare beneficiaries
seeking information on the performance of Part D plans. The Centers for
Medicare & Medicaid Services (CMS) would like to demonstrate to our
beneficiaries that we are continually raising the bar on the level of
quality of service we provide.
In promoting this vision on performance improvement, we are pleased
to announce that metrics related to the performance of Part D plan
sponsors are being planned for the near future. These metrics will
address four areas: effective customer service, effective exceptions/
appeals, effective data systems, and effective pricing.
Effective customer service will address a Part D
Sponsor's ability to provide superior service to beneficiaries
and to pharmacists. Excellent performance in responding to
inquiries and issues helps to ensure a high level of
beneficiary satisfaction. Therefore, ensuring that Part D
sponsors are meeting standards related to low call abandonment
rates and a high percentage of calls answered within a short
time are a priority of CMS;
Effective exceptions/appeals will be monitored via
complaint data and data from the Independent Review Entity
(IRE). Ensuring that appropriate exceptions and appeals
processes are being followed is crucial to providing
beneficiaries access to the prescription medications they need;
Effective data systems will measure Part D sponsor's
ability to process data files in a timely manner; and
Effective pricing will focus on Part D sponsors
ability to provide accurate pricing data for the Medicare
Prescription Drug Plan Finder and to ensure formulary
synchronicity between approved formularies and the formularies
displayed on the Medicare Prescription Drug Plan Finder.
The release of these data will be completed in phases. However,
please be assured that CMS is committed to ensuring Plans meet the
statutory requirements as set forth by the Medicare Prescription Drug,
Improvement and Modernization Act of 2003.
Sincerely,
Cynthia Tudor, Ph.D.
Acting Director
Medicare Drug Benefit Group
__________
Attachment #4, Consumer Union response to above CMS letter
May 1, 2006
Dr. Cynthia Tudor
Acting Director
Medicare Drug Benefit Group
CMS
Baltimore, MD
Dear Dr. Tudor:
Thank you very much for your letter of April 25th (copy attached)
providing information about the schedule of the types of data that will
be made available to help Medicare beneficiaries choose a prescription
drug plan, either as a new enrollee or during this fall's open
enrollment season.
The letter is certainly helpful. Public information about the
quality of plan call centers is certain to improve service in that
area. A small survey we have on our Consumers Union Website where we
ask people to `share their story' about the plans has brought us some
dramatic examples of poor service, often centered on non- or mal-
functioning call centers.
The other three items listed in the letter are very important,
but--and this is said with great respect for the enormous task and
burden the agency has been through in the last two years--they are
fairly self-evident. The plans should be following an appropriate
appeals process, processing of appeals should be timely, and the data
on prices and formularies should be accurate. If a plan is failing to
carry out these fundamentals, then we hope the plan will not be allowed
to continue in Medicare in 2007.
In terms of consumers making a choice, there is a great deal more
to this program than the quality of the call centers. Medicare has been
unable to conduct the consumer satisfaction surveys called for in the
law, Therefore, we hope that additional plan quality information can be
made public as soon as possible, and certainly before the
advertisements for the new plan year (roughly October 15, 2006).
Specifically, we hope that more information can be provided on plans:
-- Generic dispense rate: Dr. McClellan and others in the
Administration have repeatedly cited a Consumers Union study
that showed how beneficiaries could save thousands of dollars,
and perhaps avoid falling into the `donut hole,' if they
considered the use of generics that are as effective and safe
as brand-name drugs. Giving consumers information on the
`generic dispense rate' that CMS is already collecting will
help beneficiaries understand which plans may provide the most
financial relief. This information is particularly important
because we note that the final version of the anti-fraud manual
unfortunately deletes language calling for plan pharmacy and
therapeutics (P&T) committees to have members who are free of
conflict from pharmacy benefit managers. Dropping that conflict
of interest ban may increase the influence of PBMs in a plan's
formulary, and result in the listing of brand-name drugs that
offer a larger rebate (profit) to the plan, rather than
generics that are a better bargain for consumers.
-- the number of grievances received per 1,000 enrollees;
-- the number of prior authorization, step therapy, tier, and
non-formulary exception requests received per 1,000 enrollees;
-- the number of appeals/exceptions it receives per 1,000
enrollees, and
-- the resolution of those appeals (pro- or con-consumer).
The sooner quality information that CMS is already collecting is
made public, the sooner plans will seek to improve their performance,
and the sooner customers can make informed decisions when selecting a
plan.
Thank you for your consideration of these additional requests.
Sincerely,
William Vaughan
Senior Policy Analyst
Consumers Union
Chairman JOHNSON OF CONNECTICUT. Thanks very much.
Thank you very much, Mr. Vaughan, for those practical
suggestions. I think all those things are worth our attention.
Ms. Gottlich, just to move through quickly, do you think
that drugs are an entitlement under Medicaid?
Ms. GOTTLICH. Under Medicaid?
Chairman JOHNSON OF CONNECTICUT. Yes.
Ms. GOTTLICH. Do I think that drugs are an entitlement
under Medicaid?
Chairman JOHNSON OF CONNECTICUT. Correct.
Ms. GOTTLICH. I think that health care is an entitlement to
everyone, but----
Chairman JOHNSON OF CONNECTICUT. I am talking about under
the law.
Ms. GOTTLICH. Yes, I do, actually. There are drugs that are
required under Medicaid, and some are optional.
Chairman JOHNSON OF CONNECTICUT. Let me make clear that
under Medicaid that drugs are an optional benefit that States
may offer. Let me also make clear for those of you who think
that the State programs are so terrific that in California, you
can have a maximum of six prescriptions a month. Think what
that would do to seniors. Think how much better off seniors on
Medicaid are----
Ms. GOTTLICH. Mrs. Johnson, when we raised this issue with
advocates across the country, they cheer when we say that
Medicaid beneficiaries, dual eligibles are worse off. At a
meeting of the National Academy of Elder Law Attorneys two
weeks ago, before 300 people, when I made that statement,
people cheered.
Chairman JOHNSON OF CONNECTICUT. Ms. Gottlich, if you will
suspend for a moment, I am making some comments. I want to move
through my time and not use more than my 5 minutes.
Ms. GOTTLICH. Okay; that is fine.
Chairman JOHNSON OF CONNECTICUT. The point that I am making
is that Medicaid program after Medicaid program in this country
limits the number of prescriptions, limits the dollar value
those prescriptions can cost. Medicare Part D is the first
entitlement to prescription drugs that any poor group, much
less any group, have had under a publicly funded policy, and I
am very proud of that.
As many of you have pointed out, it is a very important
step forward.
Ms. GOTTLICH. Let me point out to you that the State of
Connecticut is one of the few States that has decided with
State funds to reimburse----
Mr. ENGLISH. Regular order.
Chairman JOHNSON OF CONNECTICUT. I appreciate that, and I
like that, but not all of the States have offered to do that.
It is also true that our taking on the drug costs of Medicaid-
eligible seniors is going to save States a lot of money, and I
hope they will use it to do what Connecticut and Pennsylvania
and other States have done; that is, to accommodate the level
at which subsidies phase out.
So, we go above the 150 percent of poverty mark up to 225
percent of poverty mark, and this Subcommittee made all those
States' payments count so that none of those people are ever
affected by the cap. That is the opportunity the States have to
use the money we are saving them, not only under Medicaid but
for their State retiree, State employee retiree programs, which
we also subsidize. So, this is a big win for States. They have
an opportunity to adjust that spend-down level, and I hope that
they will take it.
Now, there are a couple of other points I wanted to make.
First of all, Ms. Larkin, thank you very, very much for the
aggressive efforts of your company in outreach. Indeed, the
partnerships that you have established, I think it is fair to
say, are partnerships that United has never established in
reaching out with their regular health care plans; is that not
so?
Ms. LARKIN. It is correct. One thing we found about Part D
is----
Chairman JOHNSON OF CONNECTICUT. Unfortunately, I have very
little time.
Ms. LARKIN. Okay.
Chairman JOHNSON OF CONNECTICUT. So, I just wanted to note
that about your testimony, that you have developed, and you
have helped us develop, a depth and breadth of partnerships.
You mention working with Jesse Jackson; absolutely wonderful,
and he says over and over again on the radio, sign up.
On the other hand, Ms. Aronovitz, I do find some of the
things that GAO did really quite questionable, and I will only
have time probably for one comment, but the way you judged
readability, it seems to me inferior to the way CMS dealt with
readability. The traditional testers of readability rely
heavily on counting syllables: deductible, formulary,
prescription, all those words have multiple syllables, and they
come out poorly by those raters.
If the test is also looked at from the kind of criteria
that companies that specialize at looking at the clarity of
message, navigational clues, and graphic elements, then, it is
very clear, and the CMS has won national awards for the quality
of their work.
Now, unfortunately, you are not going to have time to
answer, because as Chairman, I wanted to flip through a lot of
comments that were made, and I have to stay to my 5 minutes. I
will listen to the comments of others, and afterwards, I will
be happy to listen. I do feel we have to conclude the hearing
so that people can get on their planes.
So, I will yield now to Mr. Stark.
Mr. STARK. Thank you, Madam Chair.
I did want to make some semantic corrections. Once Medicaid
offers a prescription drug program, it cannot be revoked, and
so, therefore, it is an entitlement, and every State in the
union has offered drugs under Medicaid, and therefore, it is an
entitlement. On the other hand, Part D is not an entitlement to
drugs. It is an entitlement to purchase insurance, and there is
a vast difference between that and the entitlements as we know
them under Parts A and B.
I would like to follow up with Ms. Gottlich. In terms of
the low-income seniors, who we are mostly trying to help, do
you think, given, as I think, the only option that we have in
2006 is the possibility, remote as it seems now, for an
extension of the signup period. For the very low-income, it
looks like they will be accorded that and not have to pay the
penalty. Is that sufficient to deal at least with the lowest
income of our prospective beneficiaries?
Ms. GOTTLICH. Well, Mr. Stark, Mr. Steinberg and I have had
a conversation before the hearing began, and though CMS has
said or indicated that the very low-income people would not
have to deal with the penalty, we have not seen anything in
writing from CMS, and so, if you have anything in writing from
CMS that they would not have to pay a penalty, we would
appreciate that.
We are hearing from people--yesterday, I got a call from
someone in Nevada who cannot get an appointment with his State
Health Insurance Assistance Program by May 15, because they are
all booked up, which means that individual may have to choose a
plan without having the assistance he needs, and he may not be
in the best plan for him. Extending the deadline certainly
would help somebody like that who is making the efforts that he
needs to make.
Mr. STARK. Thank you.
Ms. Larkin, Mr. Vaughan suggested, and I concur, and I hope
the Chair would join with me in requesting of CMS that the
nonproprietary financial information, except the other
information that will be required from the major plans in terms
of appeals and this sort of thing, do you see any objection to
our having that information as part of our continuing oversight
activities?
Ms. LARKIN. I do not, Mr. Stark. I think because this
program is new, the amount of information, including the
financials and what it has taken to administer the program is
important to this Committee, so we do not.
Mr. STARK. Okay; do you think--my guess is, and I just want
to make sure--that some of the plans might not be very
comfortable with some of the income and expense requirements,
but----
Ms. LARKIN. I cannot answer for all----
Mr. STARK. I do know as it would help us. I am not sure
that is our role, but the interest that we would have and I
think that Mr. Vaughan is suggesting is how difficult is it for
people under appeal to get a drug that maybe they have to go
back to their physician and come back and how much time, and
that sort of information, as far as you are concerned, you
would feel comfortable with our having as part of our oversight
program.
Ms. LARKIN. We would.
Mr. STARK. I appreciate that answer, and I hope, Madam
Chair, that we could get that and, as Mr. Hulshof has
suggested, I think we could deal with it in camera if necessary
but in a nonpartisan way to find ways where we might choose,
after the election, to see whether there would be minor changes
in the program.
I wanted to ask Mr. Steinberg if you thought that the
extension of the signup period, say, until 2007, as many of us
have suggested, would do much to expand the participation in
the program.
Mr. STEINBERG. I think it would help. I think it would, if
nothing else, make the message much easier. Right now, if we
have enrollment for low-income people after May 15 but not for
others, it becomes a more complicated message for
beneficiaries. If there is a simple, clear message saying you
have more time, everyone has more time, we could reach more
beneficiaries, particularly the neediest, who really could be
helped by this program.
Mr. STARK. I want to thank you. My time is about up. Thank
you, Madam Chair.
Chairman JOHNSON OF CONNECTICUT. Thank you.
Mr. Johnson, would you like to question?
Mr. JOHNSON OF TEXAS. Yes, thank you. Thank you, Madam
Chairman.
I would like to ask the GAO, I know you were invited to our
meeting yesterday, and then, the minority pulled your
invitation. Why were you invited today?
Ms. ARONOVITZ. Well, I am not exactly sure why I was
invited or not, but I think we do have a very important
message, and I think we have done a study that has very high
integrity, and if you have a minute, I would like to respond to
the Chairman's comment, because I do think that more
explanation is required.
Mr. JOHNSON OF TEXAS. In what area?
Ms. ARONOVITZ. This is the area of the written materials,
where there was some concern about our methodology, that we
used a readability methodology that was one that was not
accepted in the field. I would like to just say that we were
very conscious of the fact that some experts do not believe
that readability, as we defined it, was sufficient in terms of
really looking at grade level.
The first thing we did to make sure that we had the highest
integrity in our work is that we adjusted for 26 words that CMS
told us they could not substitute. So, our studies and the
scores that we report are adjusted for making words like
deductible, formulary, prescription, insurance, one-syllable
words. We are treating it like it is an ``and'' or a ``the.''
Mr. JOHNSON OF TEXAS. Are you suggesting that the American
public does not know how to read?
Ms. ARONOVITZ. No, I am not. I am suggesting that in
studies where you do readability studies, one of the criticisms
is that when you have multisyllabic words, that it complicates
comprehension. Well, we made up for that.
Mr. JOHNSON OF TEXAS. You are criticizing our school
system, our educational process, not the questionnaire.
[Laughter.]
Mr. JOHNSON OF TEXAS. I think that is enough. I would like
to ask a different question.
Ms. ARONOVITZ. Okay.
Mr. JOHNSON OF TEXAS. Of United, you also were invited and
declined and then said you would come yesterday, and then, you
did not. Now, can you tell me why you are here today?
Ms. LARKIN. Well, I apologize for scheduling difficulties
that may have occurred. Part D is important to our company, and
so, we are pleased to be here today, and we will come back as
often as the Subcommittee needs.
Mr. JOHNSON OF TEXAS. I appreciate that. I appreciate your
testimony as well.
Consumers Union, you guys publish a magazine, do you not?
Mr. VAUGHAN. Yes, sir.
Mr. JOHNSON OF TEXAS. From what I can tell from some of
your comments, you are telling people that if they buy your
magazine, they can find out how to get cheaper drugs; is that
true?
Mr. VAUGHAN. No, that is a free service. The
BestBuyDrug.org, you do not have to buy that at all. We got a
separate grant from the Engleberg Foundation and the National
Library of Medicine out at the National Institutes of Health to
help take this best evidence-based medicine that is being
developed out in Oregon Health and Science University, where
they look at what is the safest and best drugs; they avoided
Vioxx and that kind of thing. The reports that come out of
there are written in doctor Greek. They are very complicated.
So, what we do is we translate them into one-syllable
words, and then, we match a price, a national price, and then,
we look and say this is safe, this is effective, and this is
the best price. If you look at the last sheet, sir, you will
see why maybe the purple pill ads that you see on TV are not
the best deals for you.
Mr. JOHNSON OF TEXAS. Okay; thank you, and I would just
like to make one other comment as concerns the extension of
time.
You know, yesterday, one of the guys said maybe we ought to
extend Christmas to January 1 so we could finish our shopping
before the deadline, and that is exactly what we have in this
situation.
Thank you, Madam Chairman.
Chairman JOHNSON OF CONNECTICUT. Mr. English.
Mr. ENGLISH. Thank you, Madam Chairman.
Mr. Vaughan, it is a privilege to have you here, because I
am very familiar with your publication. I do intend to review
in detail your recommendations.
I guess my first question is if we adopted all of your
recommendations, what impact would that have on the pricing of
this particular benefit, including the cost of the premium as
you might estimate it or the cost to the taxpayer?
Mr. VAUGHAN. All of this information is already coming in
to CMS. The plans, when they signed up, committed to deliver
this. These are deliverables.
Mr. ENGLISH. So, it is really a transparency issue.
Mr. VAUGHAN. It is a transparency issue. I think what you
would get is you would get consumers saying well, I am not the
only one who had trouble, and my neighbors did, but this plan
over here is better, and there is less hassle, and I am going
to move to that guy. Their generic dispense rate is better, and
it is a better deal. You would have informed consumers
rewarding the good players and avoiding the turkeys.
Mr. ENGLISH. Well, as someone who supports a choice-based
model for health care and who thinks that providing choices for
people, provided that they get the consumer information is a
preferable model and allows people to customize their benefits,
I like your suggestion, and I am very much going to follow
through with it and also consider following through with CMS on
it.
Mr. VAUGHAN. Thank you.
Mr. ENGLISH. I guess my other questions have to do with--
your contention is that the benefit is costing seniors money at
some level is my reading of your testimony. How do you react to
the recent figures showing that on the average, seniors will
save $1,100 under the benefit? Do you support the figures that
we have that suggest that those eligible for low-income
subsidies will save about $3,700 on the average? Are those
savings not fairly substantial for a benefit of this sort?
Mr. VAUGHAN. Absolutely, sir. I think those numbers are
correct. The question is that within 24 months, this
Subcommittee, under Title VIII of the Medicare Modernization
Act (P.L. 108-173), is going to have to vote for major, major,
major cuts in Medicare. We think you can get a better price for
pharmaceuticals, a better drug program, and as you face this
Title VIII forced vote because of the 45 percent rule, please
do not shift more costs onto the seniors and the disabled, when
we can get a better price for drugs than we are currently
getting, that is what we are urging.
Mr. ENGLISH. I take your point, but I also do not think
that that is the draconian choice that we are facing. I really
think there are a number of ways that we can deal with it.
I also am curious about your reaction to the fact that
premium costs are clearly substantially below what the original
estimates were. We were operating off of an estimate that
premium costs were going to be in the range of $37 per month,
and in fact, they have turned up at $25 a month, and in some
cases, people are eligible for--particularly in the low-income
category, for savings, like I said, around $3,700 with no gaps
in coverage.
I wonder, is that not a fairly comprehensive benefit?
Mr. VAUGHAN. Well, absolutely, but again, this is a new $8
trillion unfunded liability in the long run. Could we get a
better deal? We are trying to get consumers and taxpayers the
best buy.
Mr. ENGLISH. I take your point. Honestly, Mr. Vaughan,
given the fact that we have set up a benefit in which the
networks themselves are seeking discounts, in which they are
going to be under market pressure to generate savings? They are
able themselves to engage the pharmaceutical companies.
You know the curious thing about this whole debate is the
notion that there is no negotiation going on. In fact, there is
evidence of lusty negotiation. We have hospitals now who are
lobbying us to be guaranteed the same prices that these plans
have been able to leverage out of the networks. So, I guess
what I see out of this is some expect points, some excellent
points consistent with the difficulty of implementing this
comprehensive plan, consistent with the experience that not a
lot of people have this length of institutional memory, not
even Mr. Waxman, but it seems to me that back in the 1960s,
when we were implementing the original Medicare plan, we have a
lot of the same pains, and that was not really an argument
against Medicare itself.
Do you have any other comment on that?
Mr. VAUGHAN. I think all large Federal programs have a
rocky start, and it is a matter of trying to get them to work
better very quickly. Oversight hearings like this are key to
it, because it does catch the agency's attention, and I commend
you for it and hope you can do more.
Mr. ENGLISH. Thank you for your recommendations.
Mr. VAUGHAN. Thank you.
Mr. ENGLISH. Madam Chair.
Chairman JOHNSON OF CONNECTICUT. Mr. Doggett.
Mr. DOGGETT. Thank you.
Ms. Aronovitz, thank you so much for your professionalism
and the way that your study was conducted. If I understand, one
of the findings that you made that has not received attention
here today on what I consider to be perhaps the most critical
and basic question: when calls were made by the GAO to Medicare
to ask the simple question of which plan will offer the lowest
cost for individuals who have a given list of drugs, if I
understand your findings, in about 60 percent of the cases, the
vast majority of the cases, the information that they received
from Medicare was either incomplete, inappropriate or
inaccurate when you add all the subtotals.
Ms. ARONOVITZ. That is correct.
Mr. DOGGETT. I find that to be really troubling. You know,
until some of the comments that were made here this afternoon,
I thought that all of those who professed an interest in a
nonpartisan, objective, professional, exploration of this
problem were talking about you and your study, because the GAO
is that independent, nonpartisan group that does studies like
this.
Yesterday, I asked Dr. McClellan about this. By the way,
under your process, unlike me and the Members who requested
this, Dr. McClellan has had weeks in which to respond to your
study, has he not?
Ms. ARONOVITZ. Well, actually, we----
Mr. DOGGETT. He has a letter in here, in your report.
Ms. ARONOVITZ. Yes, he does have a letter. CMS was very,
very good about responding very quickly. We wanted to be able
to have the report ready.
Mr. DOGGETT. He has had a chance to see your findings and
to react to them.
Ms. ARONOVITZ. Yes, and we did discuss them with him, yes.
Mr. DOGGETT. Okay; and he has, I think, about a 12-page
response here to your report.
Ms. ARONOVITZ. That is the part we printed, yes.
Mr. DOGGETT. I guess what bothers me the most is just the
total state of denial at Medicare that they have a problem. It
looks to me like a 61 percent failure rate in answering the
question that not some senior who is suffering from illness and
some form, perhaps, of debilitation who is trying to struggle
through Medicare but people who were trained to make these
inquiries, they got the wrong answer the majority of the time,
the vast majority of the time, and we find at Medicare and with
its apologists and defenders of the bureaucracy and here on the
Subcommittee, an unwillingness to look at your findings,
because the first way to solve this problem is a recognition
that there has been a failure and then to reach out and make
the changes to try to do it.
Let me ask you this: part of this state of denial that we
heard yesterday was that, well, gee, a significant number of
people, 87 percent, think that they are happy with the way--
they are satisfied with Medicare. How does that number, which
sounds so happy and so consistent with the kind of pollyannish
attitude that has been brought about this legislation, how does
that square with what you found? Because it seems to be just
the opposite.
Ms. ARONOVITZ. Well, actually, I was very surprised at Dr.
McClellan's comment yesterday that he thought that the problems
that we found have been fixed. I had actually been dealing with
high level officials in his agency, because they were very
anxious to get the detailed results of our report. People in
his office were very anxious to look at our report and try to
fix things.
So, it did surprise me, to say the least, to hear him say
that things were fixed. One of the criticisms that he
particularly mentioned yesterday was about the question that
you talk about: 60 percent could not get an answer when we
called, out of 100 calls, for the lowest drug plan. Dr.
McClellan said that 35 percent--the category that we call
inappropriate--that we were not fair in reporting that, because
when you pick up the phone and call 1-800-Medicare, the fact
that the Center for Scientific Review insisted on having
personal information before they would answer your phone call,
Dr. McClellan said we should not hold that against the agency.
In fact, there is no difference between the information
that you should be able to get through a general search----
Mr. DOGGETT. Of course.
Ms. ARONOVITZ [continuing]. Than if you were to give your
personal information. The only difference, really, is that the
system would know whether you had prior drug coverage or not.
So, we feel that we are trying to be objective, and we have
no reason to try to do anything but use very accepted
methodology.
Mr. DOGGETT. Thank you, and if there is another round of
questions, I would like to hear more from you, because I think
this study really tells us about the actual current state on an
objective, professional basis of what is happening in Medicare,
even though there seems to be a general state of denial about
it.
Ms. Larkin, just in a word, does United agree with what Mr.
Steinberg was saying, that it would be desirable to eliminate
the assets test or significantly simplify it so we could help
more of the people that rely on this low-income subsidy?
Ms. LARKIN. We are finding that seniors are struggling to
complete the paperwork. We have been working with organizations
like the Medicare Rights Center, who have expertise in helping
people get through the paperwork. So, that is an area that we
are concerned about.
Mr. DOGGETT. You would like to see the change made on the
assets test.
Ms. LARKIN. Well, again, that is a decision for CMS and
this body to make, but we would be willing to be helpful in
that way.
Chairman JOHNSON OF CONNECTICUT. Thank you. I am sorry. The
time has expired.
Mr. English.
Mr. DOGGETT. Thank you.
Chairman JOHNSON OF CONNECTICUT. Mr. Hayworth.
Mr. HAYWORTH. Thank you, Madam Chairman, and again, thanks
to all the witnesses.
Mr. Vaughan, I appreciated your evaluation, and visiting
with my friend from Pennsylvania, that most major Government
programs get off to a rocky start. I read with interest one of
your comments earlier this year, quote, January is going to be
very, very tough on some of the most vulnerable people in our
society, you told the Nation's Health. That was your
evaluation.
Now that winter has moved to spring and that events do not
occur in a vacuum, have there been positive steps, or is this
just uniformly a horrible situation that continues to subject
seniors to tests draconian in nature to give----
Mr. VAUGHAN. No, of course not. Things do get better.
Mr. HAYWORTH. Good.
Mr. VAUGHAN. January was tough, and as Vicki and Mark are
saying, there is still----
Mr. HAYWORTH. I thank you for that, and that leads to a
larger question, because listening to some of the testimony
today, which offered some constructive criticism and some
evaluations that can only be described as shrill, let me just
simply ask for a show of hands, who among you would like to see
the prescription drug program under Medicare abolished?
Let the record show that not a single hand went up.
Let me also point out in closing my brief comments that
while we appreciate informational hearings, we also should
recognize, and indeed, we would be naive in ignoring another
fact; that is, the essence of political theater. Brother Aesop
offered a fable not dealing so much with a medical condition
but perhaps something that is even shown in policy analysis
about sour grapes.
While we hear about the inadequacies of the program and how
horrible it is going to be, I dare say that it is my
evaluation, both in terms of public policy and politics, that
oftentimes, constructive criticism gives way to a simple matter
of sour grapes, and with that culinary observation here, Madam
Chairman, I will yield back my time.
Chairman JOHNSON OF CONNECTICUT. Mr. Hulshof.
Mr. HULSHOF. Thank you, Madam Chairman.
Ms. Aronovitz, let me ask, I have tried to find the cut-off
date for which GAO received data or at least written documents,
and I think what I can find is the critique is of written
documents in existence as of December 2005; is that right, or
am I missing something?
Ms. ARONOVITZ. No, no, that is correct. Those are the
documents that were used primarily to communicate the program.
Mr. HULSHOF. Obviously, you have to have a cut-off point at
some time so you can begin to formulate the report that you
have been asked to comment on, so any improvements that CMS
might have made, say, for instance, in February or beyond would
not have been included necessarily in this report? Is that
fair?
Ms. ARONOVITZ. CMS had written and produced 70 documents by
the time of December 2005, and it was really gearing up, and it
had a big job. It had substantially finished its communication
materials, and those were the ones that were communicated. Now,
of course, they could have developed something since.
Mr. HULSHOF. All right; thank you.
I am told that reality shows are popular, and so, a couple
of real world--I am told simply because, Madam Chairman, you
drive such a hard-charging Committee that we do not have time
to watch the networks out there. So, just really a couple of
real world observations. Number one would be I guess I am the
most junior Member on this Committee; in other words, the
closest one to election back nine years and five months ago,
and I am only thankful that I did not have someone looking over
my shoulder to see my constituent mail service two months after
I became a Member of this Body. Hopefully, over these nine
years, things have been ironed out.
Mr. Vaughan, I reference and I applaud your testimony, the
written part, that you are encouraging beneficiaries to report
on their Part D experiences, good or bad, with your Share Your
Story Website. Again, perhaps, a real world observation, at
least from the political lens, my guess is you are going to
have more negative responses than positive.
Mr. VAUGHAN. Absolutely. There are some real horror stories
that hopefully we can get fixed.
Mr. HULSHOF. Because if you open up the opinion page of my
hometown newspaper, there are some fairly critical observations
from time to time about yours truly, and so, I always know when
I am not doing a good job, because you are motivated to write.
So, again, I applaud that, but the caveat I would have is that
you are probably going to get mostly a negative bit.
Mr. VAUGHAN. I do think that to the extent that we finally
get a scientific sample that is large enough that we can then
identify X, Y, Z plans and problems that need to be fixed. The
issue of people thinking they are joining a relatively cheap
plan and then finding out that they were enrolled in one that
is much more expensive and it is being withheld from their
paychecks that I believe has been referred to the Inspector
General, that may be a pattern that you ought to penalize and
criminalize, because there is a bunch of that out there, I
think.
Mr. HULSHOF. Thank you.
Again, just a real world observation. I think I am one of
the few Members of this Committee, the full Committee, the tax-
writing Committee that does my own taxes for our family and for
our family business; a family friend who is an accountant his
head at that very fact. Quite frankly, regarding this May 15
deadline and comparing it to the tax deadline, I cannot recall
a year that I ever filed my taxes early.
So, again, we have got a few days left, and we will see how
that resolves itself, but let me ask Ms. Larkin, you,
specifically, since you are representing a company that is
actually providing some of these plans, my colleague from Texas
asked you about the assets test. Do you, on behalf of your
company, have an opinion about whether that May 15 deadline
should be extended?
Ms. LARKIN. No, we are going to respect the right or
respect the opinion of CMS and this Congress. We are doing
everything that we can to assist beneficiaries with this
enrollment process. It includes things like making sure that
our call centers are open 24 hours a day, that we are properly
staffed, so that people who are enrolling, whether they are
enrolling telephonically online or with paper application can
be accommodated.
Mr. HULSHOF. My last final little real world observation.
In our household, Ms. Gottlich, I have a six-year-old and a
three-year-old, and every night, they are back in Missouri, and
we talk on the telephone, and I ask my six-year-old, who is
quite verbose, to share with me her high point of the day and
low point of the day. So, as we sort of bring this hearing to a
conclusion momentarily, you have shared with us some of the
horror stories and negative stories. How about sharing with us
a positive story.
Ms. GOTTLICH. My father-in-law took my advice, and even
though he has only a $13 generic drug payment each month, he
signed up this week for the lowest cost plan in New York. Now,
if you knew my father-in-law, and you knew that he does not
take anybody's advice, this is really a high point in Part D.
[Laughter.]
Mr. HULSHOF. Thank you.
Thank you, Madam Chair.
Chairman JOHNSON OF CONNECTICUT. I thank the panel.
I am going to recognize a Member of the Committee who is
not a Member of the Subcommittee, Mr. Pomeroy.
Mr. POMEROY. I thank the Chair, and I am delighted to
participate in this hearing.
Gosh, Congressman Hulshof, I cannot imagine where your six-
year-old got that verbosity trait.
[Laughter.]
Mr. POMEROY. You know, I will give you a good, new story,
too. I sat down with my 85-year-old mother, and we worked this
through, and she is going to save about $2,000 out of her
$4,000 drug bill. You sign up to this thing; most are going to
save money. That is what makes the takeup rate, in my opinion,
so revealing.
Paying your taxes, working on tax returns--that is a pain
in the neck. If you do not get it done by the 15th, there is an
extension. It is easier doing when you know you have a refund
at the end of it. Well, everybody signing up, nearly everyone,
is going to get a benefit under this thing. Still, the takeup
rate is really quite low, about 40 percent in North Dakota, and
that is better than most of the country, in part, because
Republican and Democratic officials, we have worked together to
try to get the word out, try to get the people signed up. I was
doing an event just about a week ago with Commissioner of
Insurance Jim Poolman, an elected Republican. We together want
to make this work. The Governor's office has done some good
work in trying to get people enrolled.
Forty percent on a program that is offering some very real
benefit, in fact, a benefit that we are now finding is going to
cost about double what we thought to the Treasury when we
passed it, well, that tells me there is too much complexity. I
think if we were running an insurance program and had takeup
rates when we were trying to give away benefit, and they are
not applying for it, it would tell us, whoa, something is
terribly wrong about our market interface here. We have got to
have a better takeup rate than this.
So, that is what I think we need to concentrate on. Look at
these macro numbers. The macro numbers tell us we have got work
to do. I think we obviously want this program to work. I think
there is bipartisan agreement in that one. Here we are, days
before the 15th; we have got these low sign-up rates.
It would seem to me that we ought to conclude a couple of
things: the program is too complex; we need to make it simpler,
and in light of the complexity, which has obviously played a
huge role in suppressing the takeup rate, the rate at which
seniors are applying for this, we ought to give them an
extension. It is the cleanest, easiest thing to do. Some are
suggesting keep the May 15 date but drop the penalty. My
opinion, that just adds to this confusion, and by golly, there
is plenty of confusion out there already.
My own view, and I have spent quite a bit of time on this
thing, is we ought to extend that May 15 date. I think people
are going to--once they get through the signup, they are going
to like this program.
Now, Ms. Larkin, I have got a question for you, because
what we learned about the bill and implementation, we realized
that there were some things that frankly reflected, I think,
bad judgment. I think it was bad judgment of Congress to pass a
law that--by the way, I voted for; unique to the minority, I
voted for this thing--but I did not quite understand how this
Medicaid dual eligible enrollment was going to work and that
people would be randomly assigned to plans whether it covered
the prescriptions they were on or not, and I am wondering what
you did with your company when you find somebody automatically
enrolled in something that no longer covers what they need.
Ms. LARKIN. Well, one of the things that we have been doing
with the dual eligibles in particular is meeting with them to
understand they understand the new drug benefit, and
communities and States like Florida, New York, Illinois, we
have actually been sitting down with dual eligibles, having
Town Hall meetings and making sure they understand how to use
the new benefit. We have partnered with pharmacies so that when
dual eligibles come into the pharmacy, they can help understand
how the drug benefit works.
Mr. POMEROY. Is there anything that you do for those that
you find have been kind of randomly enrolled in one of your
low-end plans that does not cover the drugs that they have been
taking for years and have been paid for under Medicaid for
years?
Ms. LARKIN. Well, our plans, we have a standard benefit,
but the dual eligibles do have the option of changing plans.
They do have that opportunity.
Mr. POMEROY. Right, and does your information outreach
advise them of that, if they need something covered that the
plan that they have been randomly assigned to does not cover
it?
Ms. LARKIN. We try to make sure that they understand what
is covered with our plan, how to use the new benefit and how
to, at the pharmacy level, how to also use the benefit. They
are informed of the----
Mr. POMEROY. We should never have passed something that is
sticking people--known, identified individuals with known,
identified prescriptions, because we have all that in the
Medicaid program, sticking them into programs that do not cover
what they are taking. That was just, in my opinion, done.
You know, I appreciate very much the efforts that the State
Government in North Dakota, working with the nursing homes,
working with others to try to make sure that people won't find
themselves no longer covered get into a program that covers
what they are doing, and I think this is a glitch that we all
need to work on.
I would encourage all providers that are finding, those
that have got coverage by virtue of being dual eligibles, but
the coverage that they have got is not responding to their
need, very specific feedback in terms of how they might move
and get into something that covers their need.
Madam Chairman, I thank you for allowing me to ask that
question of this panel, and thank you for----
Chairman JOHNSON OF CONNECTICUT. Thank you. I also will
give the Gentleman from North Dakota a letter that is more
detailed on these issues from Dr. McClellan, and I urge you to
have a briefing from CMS on this. You get a glimpse of it
through Ms. Larkin, but first of all, yesterday, Dr. McClellan
did go into it in some detail, although it is much more
interesting when you have the one-on-one situation of the
computer interface issues and the transmission, the transfer of
information issues, the problems they had between the State
banks and the Federal banks and the private sector banks and
how much of that they have worked out.
When we look at what works and what does not work, we may
have to have a delay between the time you enroll and the time
your benefit starts, because some States sort of enrolled
people, and then, one State dumped 40,000, changed 40,000 from
one plan to another on December 30th. Well, of course, by
January 1, they were not in the pharmacy's bank.
So, there are problems that we now know and that do have to
be worked out and may require changes in the law as well as
procedures. How much of that they will be able to change
through Executive Branch authority and what they will need to
change with us, this is one reason we need to observe the
deadline May 15. We need for these plans to operate, and we
need to see how, then, of the slower pace of entering all those
low-income people who now have no deadline, whether or not we
have got the problem straightened out or not.
So, we will need to watch what we learn after May 15, when
the low-income people can continue to be brought into this
system and look at yesterday, I do not remember whether it was
during the hearing or before, the representative of the Social
Security Administration went through how they deem asset
compliance. Actually, she seemed very satisfied. So, today, we
get a little different view.
Those kinds of things, we will have to look at, because we
do not want to ever go through again what we went through in
January, February, and March. The other thing that is
impressive is that for the first time, people in Meals on
Wheels--the outreach was extraordinary. We have never
accomplished that before, and if we had not had trouble with
the people in our own State computers, I think we could have
concentrated on those who were not in the State Medicaid or
dual eligible programs and been able to do a better job on the
ones just outside of that box who are harder to reach, because
they do not qualify for most of our subsidy programs out there.
Most of them do not qualify for Food Stamps or fuel assistance.
They are just above that level, and they are fairly isolated
seniors.
So, that is why reaching out to family members was so
important. This deadline, you are seeing a lot of people; I am
seeing people walking up to me saying gee, I did not know my
mother was on so many drugs. I am amused to hear my colleagues
talk about their family members. I had to do it for my own
sister. Somehow, she takes some pretty expensive drugs on a
pretty limited income. So, we do have to help one another.
There is no question about it, and we do have to make sure that
the system is--the problems are solved so that November 15,
they do not start again, and January 1, they do not start
again. There are problems with pharmacists that we also have to
look at, and we have gotten some very good suggestions from
some of you today, and we thank you for being here.
I will conclude the hearing and thank you.
[Whereupon, at 4:55 p.m., the hearing was adjourned.]
[Submissions for the record follow:]
Alamosa Dialysis Center
Alamosa, Colorado 81101
April 29, 2006
To the Committee;
For the past three and a half years, I have been the social worker
for the only dialysis unit in the San Luis Valley of south central
Colorado.I have assisted all of our forty patients in enrolling in
Medicare Part D prescription drug plans.
Almost all of these patients were already receiving good prescription
drug coverage through Medicaid.
Now, however, they are facing multiple problems including plans not
covering their medications; physicians too busy to help them with their
appeals to the drug plans; pharmacists on TOTAL OVERLOAD trying to deal
with these changes; and (worst of all) the prospect of the ``doughnut
hole,'' when they all will have to pay out-of-pocket for all their
medications after they reach the designated dollar amount of coverage.
Not one of my patients was afforded thirty days' worth of a
medication they had already been taking but which was no longer
covered. In fact, almost all of the pharmacists, and plans, DENIED that
they were obligated to provide this. These are poor, elderly people for
whom this change was devastating.
Here in the San Luis Valley, the bright idea Congress had of online
``shopping'' for, and enrollment in, a Medicare Part D drug plan is
considered laughable. NONE, not one, of my forty elderly patients has
experience with, or interest in, using the internet. NONE HAS A
COMPUTER. Many have bad eyesight.
Everybody knows that the elderly are the least likely subsection of
our population for doing anything online. WHO THOUGHT THEY COULD ENROLL
ONLINE???? What a stupid idea. Without my help, most of them would have
done nothing. My patients only have a social worker (me) because they
are on dialysis. What did other elderly do? They had no idea how to
pick or join a drug plan, and so got assigned to a drug plan which
probably did not cover their meds.
The architects of this MISGUIDED AND DEVASTATING CHANGE obviously
had no meaningful contact with low-income elderly people. Why not?? The
beneficiaries of this horrid new system are the insurance companies.
NOT the elderly. Medicare Part D is shameful.
Fran Koski, MSW, LCSW
Licensed Clinical Social Worker
Statement of the American College of Physicians
The American College of Physicians (ACP)--representing 119,000
physicians of internal medicine and medical students--is the largest
physician specialty organization in the United States. Our members
provide medical care to the majority of Medicare beneficiaries and the
College has advocated for many years for the addition of prescription
drugs to the Medicare benefit. The passage by Congress of the Medicare
Modernization Act of 2003, which added prescription drugs to Medicare
through a Part D benefit, and the implementation of the Part D benefit
by the Centers for Medicare and Medicaid Services (CMS) in January of
this year have gone a long way to bring affordable life-improving and
life-saving prescription drugs to the aged and disabled members of our
society. The College believes that this expanded benefit will have a
significant positive effect on the long-term healthcare of the nation.
The College recognizes that the implementation of a program of this
dimension, perhaps the most significant change in Medicare since its
inception in 1965, would reasonably experience some glitches and
``growing pains.'' CMS has done a commendable job addressing a number
of the early problems, which included:
Many beneficiaries having difficulty making use of
CMS informational resources--addressed by increasing the number
of operators on 1-800-Medicare, making user-friendly
modifications to the www.medicare.gov website and providing
increased funding to the State Health Insurance Programs
(SHIPs).
Many dual eligibles finding that they were not
successfully auto-enrolled in a Part D plan--addressed by
establishing a pharmacy point-of-service eligibility and
enrollment procedure.
Many beneficiaries finding that their current
medications were not in their Part D plan formulary and not
having enough time to either have their physician prescribe a
therapeutically equivalent drug or request an exception-
addressed by temporarily expanding the transition period from
30 to 90 days.
Many states having to continue to provide their dual
eligible beneficiaries with medications after Part D program
implementation due to the problems these beneficiaries were
encountering--addressed by establishing procedures to ensure
that CMS reimburses these states for their accrued expenses.
However, through this statement, the College wants to inform the
Subcommittee of several continuing problematic features of the Part D
program that need to be addressed by CMS and may require some
assistance from Congress. The College makes the following specific
requests:
The College recommends that CMS use the full extent
of its contractual authority to ensure the use of a
standardized exceptions/appeals (coverage determination)
request form by all drug plans participating in the Part D
program.
The College recommends that additional fair and
effective guidelines regarding the use of drug plan utilization
management tools be developed and implemented. It is further
recommended that these guidelines be developed by a panel of
stakeholders, including representatives of the physician
organizations, pharmacists, drug plans and patient advocates.
The College recommends that both Congress and CMS
consider extending the enrollment deadline for the Medicare
Part D benefit if there remain a large number of un-enrolled
beneficiaries after May 15, 2006.
The fact that as of the end of April over 27 million beneficiaries
are directly benefiting from the prescription drug program--with 8
million having voluntarily enrolled in a Part D plan and another
approximately 9 million having at least creditable coverage--reflects
positively on the program and its implementation. Nonetheless, there
remain aspects of the program that are problematic to the physicians
that must prescribe these medications and to their patients. The
College strongly recommends that the Subcommittee urge CMS to address
the following issues:
The need for increased standardization in the
exceptions/appeals processes employed by the drug plans.
The average physician has anywhere from 10-20 organizations
providing prescription drug plans to their patients. Each organization
requires different information to be supplied and different forms to be
completed by the physician as part of their exceptions/appeals process.
The expectation for physicians and their staff to respond differently
to each of the organizations is unreasonable. It places an excessive,
unnecessary burden on the practices, and provides an inappropriate
incentive to avoid filing such exceptions/appeals.
Recently, an American Medical Association (AMA) work group, which
included ACP, other provider organizations and patient advocate group
representatives, and representatives of the healthcare insurance
industry, developed a standardized exceptions/appeals (coverage
determination) form that can be used for all covered Part D drugs
except biotech and other high-cost specialty drugs. Acceptance of this
form by all drug plans would significantly improve this situation.
While CMS has designated this form as a ``best practice,'' the College
recommends that CMS use the full extent of its contractual authority to
ensure the use of the standardized exceptions/appeals (coverage
determination) request form by all drug plans participating in the Part
D program.
There is a need to establish additional guidelines
that limit the inappropriate use of drug plan utilization
management tools (e.g. prior authorization, step therapy,
quantity limits).
The experience of our members during the first four months of the
Medicare Part D implementation is that these drug utilization
management tools are being excessively utilized. Members are
complaining of having to process multiple prior authorizations or step
therapy requests each day. At a minimum, the large number of Medicare
beneficiaries now covered under the Part D benefit radically increases
physician exposure to these drug utilization management procedures.
Furthermore, our members have the impression that the Part D plans are
employing these cost-containing techniques at a much higher level than
had previously been used in the commercial market.
The use of these tools results in increased physician workload
through requiring the physician to engage in lengthy phone calls with
the Part D plan or to complete various forms. The effects of these
additional hurdles also cause dangerous delays in patients getting
needed medications and they take clinical time away from other
patients. Finally, these procedures provide an inappropriate incentive
for physicians not to prescribe the drugs requiring these additional
procedures.
While CMS has already developed a set of guidelines for the use of
these utilization management tools, the College believes that the
current guidelines are not sufficient. The College recommends that
additional fair and effective guidelines regarding the use of drug plan
utilization management tools be developed and implemented that ensure
the accessibility to beneficiaries of medically necessary medications,
that are respectful of the needs of the providers, and are responsive
to the cost efficiency considerations of the plans. It is further
recommended that these guidelines be developed by a panel of
stakeholders, including representatives of physician organizations,
pharmacists, drug plans and patient advocates.
The possible need to extend the Medicare Part D
enrollment date past the current May 15, 2006 deadline.
The College believes that Congress and CMS need to seriously
consider extending the Medicare Part D enrollment date past the current
May 15, 2006 deadline. This issue potentially could have a profound
affect on the ability of large numbers of beneficiaries to enroll and
take advantage of the new prescription drug benefit. Congress and CMS
must maintain focus on the best interests of the beneficiaries.
Despite the large number of Medicare beneficiaries that are
currently taking advantage of the Part D benefit, there remain over 7
million beneficiaries (as of the end of April) without creditable
coverage who have not yet enrolled. While some portion of this group
may still enroll prior to the May 15 deadline, there may remain a large
number of the elderly or disabled who do not enroll in a timely
manner--and will thus incur a significant financial penalty if they
choose to enroll in the future. This penalty may make it prohibitive
for them to enroll in the program in the future. Our members report
that a large number of these current non-enrollees remain confused
about the Part D plan--it is extremely complex and their lack of
understanding makes them fearful of making a poor drug plan choice.
This observation is confirmed by a recent Kaiser Family Foundation poll
that found that one of the most frequent reasons provided by
beneficiaries without current drug coverage for not enrolling in a plan
is it is ``too complicated.'' \1\ The College requests that both
Congress and CMS consider extending the enrollment deadline for the
Medicare Part D benefit if there remain a large number of un-enrolled
beneficiaries after the May 15, 2006 deadline. This extra time could
allow additional beneficiaries to consult available informational
resources, further discuss the issue with their physicians and loved
ones, and work through their problems with understanding the new
benefit. Providing time to allay beneficiaries' confusion and fear is a
good reason to eliminate this barrier to improved availability of these
important medications.
---------------------------------------------------------------------------
\1\ Kaiser Family Foundation. Kaiser Health Poll Report Survey:
Seniors' Early Experience with the Medicare Prescription Benefit. April
2006. Available at www.kff.org.
---------------------------------------------------------------------------
The American College of Physicians is pleased that the Health
Subcommittee is reviewing the implementation of the Medicare Part D
prescription drug benefit. The addition of prescription medicine to the
Medicare benefit is long overdue, and the College intends to continue
to work with Congress and CMS to ensure the effective implementation of
this very important program.
Statement of the American Medical Directors Association,
Columbia, Maryland
The American Medical Directors Association (AMDA) represents more
than 7,000 medical directors, attending physicians, and others who
practice in nursing facilities. On average, AMDA physicians see 100
nursing facility patients per month (which constituted approximately
8.5 million visits in 2000, or 42 percent of the total number of
nursing facility visits that year). AMDA physicians also care for
patients in other venues in the long term care continuum, which
includes home health care, assisted living settings, hospice and other
sites of care for the frail elderly. The majority of members (59
percent) also maintain a private practice outside of their long term
care responsibilities. Our comments reflect that experience, as well as
the commitment to provide the best quality of care to our patients.
Since Part D implementation on January 1, AMDA has been relaying
member problems and concerns regarding the new Part D drug benefit to
the Centers for Medicare and Medicaid Services (CMS) in weekly
conference calls and frequent e-mails. Despite CMS efforts, we are
still seeing significant problems for physicians in obtaining medically
necessary drugs for their patients.
Time is a critical issue for our physicians. Over 38 percent of
AMDA members who responded to a recent survey report spending 4-7
uncompensated hours per week trying to get appropriate medications for
their patients under Part D.i Nearly 13 percent reported
spending 8 or more hours per week. That is time spent largely taking
care of paper, rather than taking care of patients. Requirements for
prior authorizations are of particular concern, with 70 percent of
respondents reporting frequent or very frequent problems. Exceptions
requests also present problems, with 55 percent reporting frequent or
very frequent difficulties.
---------------------------------------------------------------------------
\i\ Preliminary results of May, 2006, survey.
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Many physicians are having problems accessing particular drugs or
types of drugs, with 23 percent citing problems obtaining drugs to
treat Alzheimer's disease. Some drug plans require prior authorizations
for all drugs to treat dementia, a disease which affects 40 percent of
all nursing facility residents. A member from Maine told us, ``The
hurdles created are resulting in a lower level of care being provided
for nursing home patients. They are now less likely to be prescribed
uncovered medication even if the alternative is inappropriate because
it takes too much time and effort for everyone involved.''
The problems are exacerbated by the myriad drug plans and drug plan
options with which physicians must deal. Each drug plan maintains its
own formulary, policies and procedures, with no uniformity among them.
Our members have seen light use of the standard form that CMS has
requested drug plans to use. Only 16 percent of respondents indicate
that the majority of drug plans with which they work are using the
standard form.
Recurrent problems our members report include:
Lack of Critical Information about the Drug Plan
The drug plans have often not made available correct
information regarding contacts and policies, despite CMS
requests since January to do so.
Drug plans have not provided clear information
regarding procedures for exceptions and appeals, as well as
prior authorizations. Likewise, there is a lack of access to
drug plan forms that physicians must complete for exceptions
and appeals, as well as for prior authorizations.
Each plan develops its own procedures and forms.
Although CMS is promoting use of a standard coverage
determination process, its use is not mandated.
Apparently most drug plans do not provide information
on formulary alternatives when they deny coverage of a drug.
The physician is often hard-pressed to discover what
alternatives may be substituted.
Our members continue to report lengthy delays in
telephone access; frequent problems getting through to plans at
all (e.g., busy signals, referred to other numbers; long
waits). We receive frequent reports of delays of 30 to 45
minutes, after which the call is simply terminated by the drug
plan.
Lack of Access for Emergency Medications
In at least some instances, drug plans have not been
available on a 24-hour basis for coverage determinations on
emergency medications. In such cases, CMS is advising
physicians and pharmacists to rely on the 1-800-Medicare number
for emergency access, but problems have been reported with that
system as well.
We received reports of lack of access to influenza
medications that may be required on an emergency basis to
prevent influenza outbreak in long term care facilities. The
Centers for Disease Control have approved antivirals
oseltamivir (TamiFlu) and zanamivir (Relenza) to treat
influenza this year. Some physicians report having difficulty
obtaining oseltamivir because it is not on some plan
formularies, while drugs that are on formularies to treat
influenza are contraindicated for patients with seizures or
Alzheimer's disease.
We also received reports of drug plans that require
prior authorization for all drugs to treat influenza. This is a
special problem in long term care, where prompt treatment and
prophylaxis is crucial to prevent an influenza outbreak.
In other instances, drug plans authorized appropriate
drugs but with quantity limits that were sub-therapeutic.
Onerous Administrative Requirements
Members are reporting a wide array of requirements imposed on
physicians by Part D plans in order to have prescriptions
honored. Many requirements entail personal contact by the
physician with the drug plan, or access to the enrollee's
health record, which is often not accessible to the physician,
as it remains at the long term care facility. Drug plan
communications with the physician sometimes leave the nursing
facility completely out of the loop. Some requirements seem
designed simply to deter physicians from requesting prior
approvals or exceptions. For example, one physician last week
reported that her nursing facility worked with the drug plan
for more than four hours and still could not obtain the drug
the patient needed.
As noted above, prior authorizations present serious
challenges for long term care physicians. Prior authorizations
are extra hurdles that physicians must jump in order to access
drugs that are on a drug plan's formulary.
One member noted, ``I am spending a lot of time on prior
authorizations, sometimes 14 a day, and some alternative drugs
are the cheap ones which cause harm. I have had patients on
some of these drugs for years and have already tried the viable
alternatives.'' Another told us, ``Many patients are being
forced to change their medications, even after years of
success.'' And another physician reports that ``Almost anything
non-generic has become a problem.''
Specific problems our members have encountered include but
are not limited to:
Requiring personal telephone calls from
physicians by some plans, rather than accepting faxes
or e-mails for prior authorizations or exceptions
requests. This is a major problem that consumes
significant amounts of the long term care physicians'
time and delays access to medications. The problem is
exacerbated by the fact that patients' medical records
remain in the nursing facility and may not be available
to the physician when he or she finally gets through to
the drug plan.
Requiring prior authorization for all drugs
in a class (e.g., drugs to treat Alzheimer's disease
and influenza).
Requiring additional documentation as part of
prior authorization (e.g., requiring a mini-mental
status score for drugs for Alzheimer's, even of
patients who are too ill to take such an exam).
Requiring prior authorizations for
inexpensive drugs.
Requiring physicians to complete a form in
order to obtain the correct form to complete for prior
authorizations or exceptions.
Additional problems:
Some additional problems include:
Lack of recommendations by the drug plan for
alternative drugs when a prescribed drug is not on the
formulary. Physicians often do not have access to
patient records or drug plan formularies when they are
called regarding adverse coverage determinations, and
the suggestion of appropriate alternative drugs that
are on formularies could expedite the prescribing
process.
Omission of all forms and doses of formulary
drugs from drug plan formularies. Long term care
patients may require alternative strength doses or
alternative delivery system (liquid, sustained release,
intravenous, etc.) for medical reasons, such as no
longer being able to chew or swallow, but physicians
are sometimes required to pursue exceptions for such
different forms and dosages of drugs that are on the
plan formulary.
There seems to be little understanding on the part of drug
plans of the requirements regarding unnecessary drugs contained
in the CMS Conditions of Participation for nursing facilities
(42 CFR 483.25(1)(1), 483.25(1)(2)(i)), or of the extensive
related guidance to surveyors regarding unnecessary drugs and
drugs whose use may be contraindicated in elderly patients.
That federal guidance, contained in CMS' State Operations
Manual, recognizes that some drugs are simply inappropriate for
use in frail elderly patients. We have heard of numerous
incidents in which drug plans formulary drugs are medications
that are considered potentially harmful in the elderly.
Finally, we are extremely concerned with the incredible
burdens the new drug benefit is imposing on physicians.
Physicians are reporting spending up to an hour trying to
obtain just one drug for just one of their patients. Sometimes
it seems that if physicians pursue problems high enough up the
drug plan chain of command, problems are resolved, but our
current system for providing and paying for care does not
support that level of physician involvement.
In at least one instance when a physician could not obtain
emergency authorization for drugs to treat an outbreak of
influenza in a nursing facility and prevent the transmission to
other patients, the physician had to argue for one day and
discuss his willingness to speak to the press about the need to
obtain the medications to prevent patient deaths in order to
obtain the necessary drugs. Physicians simply should not have
to go to such lengths to obtain medically necessary medications
for their patients. Nor do Medicare physician payments
encompass such an increased amount of work.
Right now, our members are taking on the drug plans to fight
for the medicines they believe their patients need. But the
current level of effort of 4 or more extra hours per week is
not likely to be sustainable. The result may be that physicians
have to defer to the drug plan formulary choice, regardless of
whether it is the best drug for their patient.
In one such case, a physician was unable to convince the drug
plan to approve his choice of antibiotic for some of his
patients, arguing that the formulary alternatives would not
adequately treat the patients' infection. The patients grew
sicker on the drug plan's choice of antibiotics and required
hospitalization for pneumonia. One nursing facility reported
that some patients went without their medications for days. It
seems that the pharmacy did not refill the prescriptions
because prior authorizations were needed, but no one had told
either the attending physician or the nursing facility
We are extremely concerned that the impediments to medically
appropriate medication that many of our members are now
experiencing will result in increased adverse drug interactions
in our frail, elderly patients, as well as increase reactions
between drugs and patients' other medical problems. We ask for
your assistance in preventing more of these situations.
AMDA Recommendations
Congress should consider how to reshape the Medicare drug
benefit to simplify the program for Medicare beneficiaries and
for administration. Simplification could make the program more
attractive to beneficiaries, ease the administrative burden on
physicians and health care providers, and reduce the cost of
the program.
In the meanwhile, several steps could be taken that would
immediately improve implementation of the drug benefit,
including:
Legislation should require CMS to mandate
drug plan use of one uniform procedure and form for
exceptions, prior authorizations and appeals. This step
is urgently needed to reduce inordinate amount of time
physicians are spending trying to deal with myriad drug
plan procedures and forms. As one member told us, ``It
is incumbent on the Medicare program to develop
universal minimum standards and hold the providers to
them''. The current system of voluntary compliance
simply is not working.
Legislation should specify that CMS will
provide clinical direction and clarifications as needed
to drug plans to ensure prompt access to medically
necessary medications. Clinical directions should
include, among others:
Requiring drug plans to include
on their formularies, without prior
authorization or quantity limits, drugs that
CDC recommends to treat influenza each year;
Requiring drug plans to provide
formulary alternatives, without prior
authorization requirements, for formulary drugs
that are considered inappropriate for use in
the elderly, particularly those listed as
inappropriate in CMS guidance to long term care
surveyors.
Prohibiting prior authorization
requirements for all drugs in a class;
Requiring drug plans to offer
medications alternatives when they refuse to
cover a drug;
Requiring prior authorizations to
be provided for one year, with timely renewal
notices to physicians and nursing facilities;
Prohibiting inappropriate and
onerous requirements for drug utilization
programs (such as prior authorization for
inexpensive, safe, common medications,
requiring prior authorizations for all drugs to
treat Alzheimer's' disease, and requiring
completion of one form in order to receive a
second form which must be completed for drug
plans to decide whether to cover medications).
Congress should require greater CMS oversight
of drug plans with quarterly public reports, and prompt
application of sanctions against non-compliant drug
plans.
Congress should amend the Medicare drug
benefit to eliminate co-payments for all dual-eligible
beneficiaries who receive long term care services.
Currently, nursing facility residents are not required
to make Part D co-payments, because they pay all but a
small portion of their incomes to the institution that
is caring for them. But dual-eligibles residing in
assisted living facilities, or who are enrolled in the
APCE program or receiving home can community-based long
term care services, are required to make co-payments,
although they also must also pay most of their income
to their care provider
The Medicare Part D drug program was based on a managed care model
which may work well for younger, healthier, ambulatory individuals.
However Part D requires more flexibility in dealing with the needs of
clinically fragile long term care patients with multiple drug therapies
and multiple co-morbidities. A member told us, ``Watching the process
unfold for the past 5 months it is becoming clear to me that nursing
home patients are simply being treated like community dwelling Medicare
recipients. As a result, we are now seeing signs of a system failure
and patients not getting their medications on time or not at all.''
Long term care physicians need your help in making the Medicare
drug benefit work for their patients, and preserving the quality of
medication therapy that they were previously receiving.
Thank you for the opportunity to share our experiences with you.
Campaign for America's Future
Sherman Oaks, California 91423
April 30, 2006
To the Committee on Ways and Means
Dear Congressmen and women,
I am a 36 year old disabled citizen. I was run over by a car at age
7 and have lived my life in terrible pain and disability. To survive my
pain I require quarterly injections into my implanted intrathecal
morphine pump, plus daily doses of powerful narcotics to allow me to
deal with my situation which will never improve but just get worse with
age. When I received the information about Medicare Part D I was very
skeptical because of the corruption I heard went on in Washington to
get this bill made into law. The bribing of officials, the drug and
insurance companies writing the laws, but being disabled and this being
the law I had no choice but to accept it.
Living in California there are many choices. I spent weeks pouring
over the programs, but almost every one had me spending over $22,000
per year for my meds. At that rate why have insurance? My meds are
Generic except for the pump medication which is simple morphine anyway.
Your system is highway robbery. It is a total slap in the face of every
single decent American and my true belief is that every man or woman
who worked to make this a law will rot in hell for eternity. This is
not a benefit but a curse. And not only is it a curse, but you will
punish those who refuse to hop along and support your crimes against
the elderly.
All of you in Washington must have had parents at one time, but I
guess you have made enough money from your backroom deals that you do
not need to worry about these things. Your health insurance is the best
in the nation, so these issues mean little to you, but I can tell you
one thing. Your greedy corrupt actions are turning America into a third
world nation where Grandmas and Grandpas have to decide between food or
medicine. When their northern and southern cousins across the border
can buy the same meds for pennies on the dollar, the almighty American
Congress rapes it's own.
I don't know if there is a God in Heaven or if Satan is in Hell,
but by God if they do exist I know where all of you are going on
account of the so called work you do in Washington.
Sick of your corrupt ways,
Cary Brief
Statement of the Center for Medicare Advocacy, Inc.
The Center for Medicare Advocacy, Inc. (the Center) submits this
testimony to be included in the record of the hearing on Implementation
of Medicare Part D, held before the Health Subcommittee of the
Committee on Ways and Means on Wednesday, May 3, 2006.
Founded in 1986, the Center is a national, non-partisan educational
and advocacy organization that identifies and promotes policy and
advocacy solutions to ensure that elders and people with disabilities
have access to Medicare and quality health care. The Center's national
office is in Connecticut, with offices throughout the country,
including Washington, D.C. The Center represents thousands of
individuals in Medicare appeals each year, responds to calls and e-
mails from individuals in Connecticut as well as from all across the
United States, and provides support to CHOICES, the Connecticut state
health insurance program. Requests to the Center for assistance have
increased exponentially with the advent of Medicare Part D.
The White House and the Centers for Medicare & Medicaid Services
(CMS), in their efforts to promote Part D, proclaim that ``the new drug
program is working well for most seniors (sic) and pays nearly all of
low-income beneficiaries' drug bills.'' See, e.g., ``The Medicare
Prescription Drug Benefit: Helping Seniors and Reducing Costs,'' a Fact
Sheet issued by the White House on March 14, 2006.
What they do not say is that many of the beneficiaries encountering
problems are dually eligible for Medicare and Medicaid (dual
eligibles). The barriers to their getting drugs that were previously
paid for by their Medicaid programs are not temporary glitches but
result from the very design of the Part D program. The Center avers,
based on our conversations with Medicare beneficiaries, their families
and their advocates, that this most vulnerable population is, as a
whole, much worse off than they were before they were shifted from
Medicaid to Medicare drug coverage.
Problems and recommended solutions include:
1. Dual eligibles have been randomly assigned to average-cost
prescription drug plans, most of which do not cover all drugs commonly
used by this population.
To ensure no gaps in coverage when dual eligibles transition
from Medicaid drug coverage to Medicare drugs coverage, the Medicare
Modernization Act provides for them to be randomly assigned to plans if
they do not choose a plan on their own. Random assignment benefits Part
D drug plans by guaranteeing them an equal portion of the enrollment of
the dually-eligible population, without burdening them with too large a
portion. Random assignment does not, however, benefit beneficiaries.
The Inspector General of the Department of Health and Human
Services has determined that nearly one-third of dually eligible
beneficiaries--a highly vulnerable population with unusually high
medication needs--were assigned to drug plans that included less than
85% of the 178 most commonly used Part D drugs.\1\ Some of the drugs
excluded from a substantial number of plan formularies (lists of
covered drugs) are drugs for high blood pressure, high cholesterol and
pain relief.
---------------------------------------------------------------------------
\1\ Office of Inspector General, ``Dual Eligibles'' Transition:
Part D Formularies' Inclusion of Commonly Used Drugs,'' (OEI-05-06-
00090 January 2006).
---------------------------------------------------------------------------
Only 18% of beneficiaries were assigned to plans that covered
all 178 drugs, but this does not mean that even these plans cover all
drugs needed by each beneficiary--only that they cover the most
commonly used drugs. Moreover, even plans that cover all drugs may have
quantity limits, prior authorization and other barriers to immediate
and full coverage of an individual beneficiary's prescription drug
needs.
Other researchers came to similar conclusions after reviewing
formularies of plans available in specific regions. For example,
Jocelyn Guyer and Jeffrey S. Crowley of the Georgetown Health Policy
Institute wrote a series of three policy briefs for the Connecticut
Health Foundation. They found large variations in the extent to which
the 44 stand-alone prescription drug plans available in Connecticut
covered medications, with major and frequent shortcomings in coverage
of critical drugs used by dual eligibles.\2\
---------------------------------------------------------------------------
\2\ The policy briefs are available at www.cthealth.org. Judith
Stein, Executive Director of the Center, was a research contributor to
the policy brief on Implications for dual eligibles.
---------------------------------------------------------------------------
A 33 year-old beneficiary from Orange Part, Florida, described
the difficulties experienced by dual eligibles in an e-mail sent to the
Center last week: \3\
---------------------------------------------------------------------------
\3\ Beneficiary comments are verbatim and may contain grammar
mistakes.
I have been on Medicaid since 1996, and Medicare since 1998.
I get Social Security Disability, and I am below the poverty
level. Since Medicare Part D., has kicked in. I have had to pay
for medicines that Medicaid used to pay for, now I'm
responsible for the co-pays of my medicines. I am a kidney
transplant patient and have been a diabetic for 30 years. I
also have been diagnosed with HIV in 2001. I can't pay for my
medicine copays, because I make approximately $8,500 a year.
Even with the ``extra help'' that I get from Medicaid, I still
have to pay about $40 a month for medicines. However, my
medical insurance doesn't cover my transplant medications or my
HIV medications. These medicines cost about $400, a month. What
has the president done? Is there a plan to kill off the elderly
and sickly, or do we just have to suffer the consequences?
---------------------------------------------------------------------------
Thank you for letting me speak my peace.
Center for Medicare Advocacy Recommendation: In assigning
beneficiaries to plans they have not chosen, more attention
must be given to matching individual beneficiaries' drug usage
and pharmacy preferences with the formulary and pharmacy
networks of individual plans.
2. Getting coverage for drugs that are not on a plan's formulary
involves engaging in one of several complex processes. The frailty of
this population, including a high incidence of cognitive impairments,
makes navigating those processes more difficult than for other
beneficiaries.
Applying for an Exception. Each plan must have a process for
enrollees to ask for an exception to non-coverage, and each plan's
process is different. The Center is part of a group, spearheaded by the
American Medical Association (AMA) and working in conjunction with
America's Health Insurance Plans (AHIP), that has developed a model
exceptions request form. Although CMS has posted the model form on its
web site, and AHIP members may post the form on their web sites, CMS
does not require the form to be used by the plans.
An exception request must include a doctor's statement that all
drugs on the formulary are either less effective or harmful to the
beneficiary or both. Some plans are requiring the submission of
clinical notes verifying such assertions. Because each plan's process
is different, physicians must deal with multiple processes to serve all
their patients. Some doctors are charging for completing prior
authorization and exception request forms. Dual-eligible beneficiaries
who cannot pay even nominal fees for this service cannot avail
themselves of the exceptions and appeals processes.
The problems that arise from trying to navigate the exceptions
process are almost too numerous to include in testimony. The issues
brought to our attention by Medicare beneficiaries, their families, and
their advocates include:
Not knowing that there is a process to request an
exception or coverage determination;
Not getting through to customer service offices;
Customer service offices not being available to
accept emergency calls from doctors outside of normal business
hours;
Not having the exception request treated as an
exception because the beneficiary did not use the proper term;
Having to fax or mail to a plan a preliminary request
form in order to get the request form that will start the
coverage determination process. Without a coverage
determination a beneficiary cannot file an appeal;
Plans not complying with statutory time frames;
Plans not forwarding cases to the independent review
entity as required when time frames are not met;
The independent review entity failing to conduct a
new, independent review of the medical evidence.
Changing prescriptions. Plans encourage enrollees to change from
an uncovered drug to one on their formulary. Such a change presumes
that there is a drug on the formulary that would work as well as the
uncovered drug. Making such a change may involve multiple visits to a
doctor's office, each of which may cost money in terms of
transportation and office visit co-pays, for the doctor to first
prescribe, and then monitor, use of the alternate drug. Duals often do
not have the resources to pay for the transportation or the cost-
sharing for such visits. Since many use clinics, they may not be able
to get an appointment with a doctor before their medication runs out.
Changing to a plan that covers the drug in question. Unlike most
Medicare beneficiaries, dually eligible beneficiaries are allowed to
change plans whenever they want to, with their new coverage effective
the month following their action to change. Changing plans, however, is
difficult and not without risks. First, the number of average cost
plans in each region ranges from six to eighteen and the systems
available to help beneficiaries know what each plan covers require
access to high speed Internet service and a printer. Few dual-eligibles
use the Internet, so to make use of these decision supports, a
beneficiary must generally get help from someone else. The programs
that are funded to counsel beneficiaries are overwhelmed by people
needing such assistance and by the many difficulties that have arisen
during the first months of the program.
Moreover, processing new enrollments in a plan is complex,
requiring communication between the old plan, CMS, the new plan, and
another government contractor. The information takes days to weeks to
run through the system; a change made toward the end of the month will
not show up in the system until later the following month, making it
difficult to purchase drugs in the first part of the month.
Finally, plans can change the drugs on their formularies at any
time, with 60 days' notice to individuals taking the drugs in
question.\4\ Even an intelligent choice of a plan covering all of a
beneficiary's current drugs could be for naught, if the plan removed
some or all of those drugs from its formulary two months later. An
April 27, 2006 Memorandum from Abby Block of CMS to Part D Sponsors,
``Formulary Changes during the Plan Year,'' suggests that plans
continue to cover a drug for any plan enrollee who is currently taking
the drug even after the plan removes the drug from its formulary for
other enrollees. Unfortunately, this CMS Memorandum to exempt current
enrollees from formulary changes involving their current drugs is not
binding on any plans. This Memorandum, like the rest of the policy
guidance issued by CMS to implement much of Part D, has not gone
through the Administrative Procedure Act notice and comment rulemaking
process, and does not have the same legal effect as the statute and the
implementing regulations.
---------------------------------------------------------------------------
\4\ Note that the regulations specifically allow Part D plans to
change their formularies. 42 C.F.R. Sec. 423.120(b)(5),(6).
---------------------------------------------------------------------------
The consequences to beneficiaries are enormous, as these client
experiences demonstrate.
It was extremely stressful to get a plan picked out that
would even cover my medicines, I'm disabled not old and every
step of the way has been a battle. The insurance company
STINKS. I have to fight for nearly every prescription. From
getting the right generic to one they prefer. It's almost like
they are my Dr, not the insurance plan. I have had to go the
the ER several times becuase I was forced to wait or fight for
meds that would have helped. I also have athsma and now they
are denying my singulair, suddenly some crap about needing pre-
approval. This is some of the worst insurance ever. Medicare
Part D is one of the worst things the Bush administration has
done.
-- E-mail dated April 26, 2006, from a 35 year old female in
Hawley, Minnesota.
My other half has AIDS and our pharmacist suggested that we
go with AETNA because it covers all his HIV meds as well as all
the other meds he's on. So we signed him up for it and now it
seems like each month they are not wanting to pay for certain
non-HIV medications. They want him to take something else. One
of those is to prevent him from getting pneumonia. It's
Bactrum. Their formulary on-line says they will pay for it, but
their letters keep saying they won't. After one month he's
already into the catastrohic coverage part because of all the
meds he's on. Every month it's a different story, a different
medication is being denied. What gives them the right to play
doctor with people's lives?
-- E-mail dated April 26, 2006, from a 42 year old male in Land o
Lakes, Florida
Center for Medicare Advocacy Recommendations:
(1) Exceptions processes should be uniform for all plans, with
a single form made available to all physicians and pharmacists;
(2) Plans should be prohibited from removing drugs from their
formulary during the plan year;
(3) More money should be made available to programs that
provide individualized assistance to beneficiaries.
3. Plans' transition policies have been difficult to get and
difficult to enforce at the pharmacy level.
Each plan is required to have a transition process to address
the situations of new enrollees who are taking drugs not on the plan's
formulary. The transition policies include special focus on the needs
of dually eligible beneficiaries. While issues with transitions have
been prominent in the early months of Part D because the entire program
was ``transitioning'' into existence, transitions will occur every
month as new enrollees join plans, and especially every January, after
major plan shifting has occurred during the annual enrollment period in
November and December.
CMS asked plans to extend the transition coverage of non-
formulary drugs through the end of March, so that beneficiaries could
get a 90-day supply. Such an extension was voluntary on the plans'
part. And, even after the extension request, dually-eligible and other
beneficiaries are coming away from the pharmacy with no prescription,
or with just a few days' supply of pills.
Moreover, the transition is merely to allow the beneficiary to
change drugs, change plans, or request an exception so that her drug
can be covered even though it is not on the formulary. But many
beneficiaries are not receiving the notices they are supposed to get
telling them what they should do next. For example, Center staff spent
many hours during February and March 2006 helping a woman in California
get coverage of a prescription that she had been taking for 35 years
for a chronic condition. (Part of the problem was that the plan could
find no record of her enrollment until mid-February.) She contacted us
last week to say that, although she had received the prescription in
February and March, the plan was once again telling her that the drug
was not covered. We suspect that she got the drug in February and March
under the transition process, and now the plan wants her to go through
the exceptions process--again--to get her medically necessary drug.
A 58-year old male from Jellico, Tennessee commented to the
Center via e-mail about the transition process:
I Called First Premier Health(my Provider For Part D to see
if All My Medications Were Covered before I Signed on With
Them, They Assured Me They Were, After 2 Month's They Wrote Me
A Letter Saying that My(Pravachol) Was No Longer Covered, I Had
to Try Alternative Meds First, Hell I've Tried Them All,
Pravachol Works The Best For Me, I've Been On It For Over 4
Years Now!! This Does Not Make Any Sense!!! Thank You!! I Have
Always been Taught When Something Works Real Well For You, Stay
With It!!!!
Center for Medicare Advocacy Recommendations:
(1) Transition policies should be uniform across plans and
easily made known to beneficiaries and pharmacists;
(2) Plan call lines, for pharmacists to get instruction to
override codes, should be required to operate 24 hours a day,
seven days a week;
(3) CMS should enforce contract requirements of plans.
4. Dually eligible beneficiaries using long-term care services
are treated differently depending on where they receive the services.
Dually eligible beneficiaries are provided the best Part D
subsidy available under the law. They pay no premium (for an average
cost plan) or deductible, have no coverage gap (doughnut hole) and no
cost-sharing at all after they reach the catastrophic coverage
threshold. Their co-payments vary from $0 to $5, depending on income or
place of residence.
Dually eligible beneficiaries residing in nursing homes and
certain other institutions have no co-payments, since they pay all but
a very small amount of their income over to the institution that is
caring for them. Dually eligible beneficiaries who are getting their
long-term care services in assisted living facilities, board and care,
and other similar community settings, however, are treated differently
and may have co-pays as high as $5 per prescription (for typically more
than 10 prescriptions), even though they, too, must pay most of their
income to their care provider and even though their care needs are
similar to those of nursing home residents.
Center for Medicare Advocacy Recommendation: All dually eligible
beneficiaries receiving long-term care services should be treated
similarly and should have no cost-sharing obligations, since most of
their income is given over to the provider of service.
5. Dually eligible beneficiaries have lost Medicaid as secondary
coverage.
The most common interrelationship between Medicare and Medicaid
is that Medicare is the first payer for services and Medicaid picks up
where Medicare coverage stops. This is not true under Part D. Medicaid
is prohibited from paying for drugs that are covered by Part D. For a
state to provide the kind of ``wrap around'' coverage that is typical
for other services, it must use its own money, without any federal
contribution. According to the Inspector General of the Department of
Health and Human Services, only four states have indicated they will
provide some kind of coverage for drugs that are not on a Medicare
plan's formulary.
Part D imposes prescription drug co-payments for the first time
on a substantial number of dual eligibles, including the 1 million dual
eligibles in California (approximately one-sixth of the dual eligible
population). While the co-payments for duals are supposed to be
minimal, for someone living on $817 (100% of the federal poverty level
for an individual) or less each month, $3 per prescription is a
fortune. As a beneficiary from New York wrote to the Center recently,
she lives on Social Security disability benefits and cannot afford to
pay the $3 co-payment every time she goes to the pharmacy.
For some dual eligibles who previously qualified for Medicaid on
a ``spenddown'' basis, the advent of Part D means they will lose all of
their supplemental health coverage. A 60-year old client from Milford,
Connecticut, who has Hepatitis C, has long alternated between Medicaid
and ConnPACE, the state pharmacy assistance program, to help with
prescription costs during his spenddown periods. He takes several very
expensive medications and qualifies for the low-income subsidy. In
fact, prior to Part D, when the entire cost of his medication--
including the portion paid by ConnPACE--was applied against his
spenddown, he usually met his spenddown obligation in less than one
month. With the advent of Part D, only that portion which he pays--his
$2 and $5 LIS co-pays--will count against his spenddown obligation. Our
client correctly perceives that he will probably never meet his $3,000
spenddown obligation at this rate. He currently is in need of an
expensive medical test that he cannot afford, and is having difficulty
finding a provider who will accept him as a patient as he no longer has
Medicaid coverage and is unlikely to obtain it in the future.
Center for Medicare Advocacy Recommendation:
(1) Amend the law to provide dual eligible coverage for
prescription drugs, just as it exists for other health care
services, including federal matching funds for state
expenditures;
(2) Amend the law to allow Part D drug costs, including the
low-income subsidy, to count toward Medicaid eligibility based
on spenddown.
6. Individuals with Medicaid will experience a gap in
prescription drug coverage when they first become eligible for
Medicare.
Individuals with Medicaid lose their Medicaid drug coverage on
the first day of the month that they become eligible for Medicare, even
if they have not enrolled in a Part D plan. The state will transmit
information about them to CMS when the state becomes aware of their new
dual eligibility status. It is unclear, however, whether and when
states will have that information. In addition, states often send
information to CMS about new dual eligibles only once a month,
generally at the end of the month. CMS may not be able to enroll a new
dual into an eligible plan in time for drug coverage to begin the
following month. CMS has indicated that Part D coverage will be
retroactive, but it is unclear how duals will pay for their
prescriptions while coverage and plan enrollment is being determined.
New dually eligible individuals can use the Point of Service
(POS) option at the pharmacy that facilitates enrollment into the point
of service contractor. The contractor will then inform CMS so that the
individuals can be enrolled into a plan. Under the POS option, the
pharmacy distributes a 14-day supply of medicine to the individual,
with the possibility of an additional 14-day refill. Individuals who
try to get prescriptions under this option at the beginning of a month
may not have sufficient medicine to last until they are enrolled in a
Part D plan.
Center for Medicare Advocacy Recommendation: Identify Medicaid
recipients who are about to become Medicare eligible sufficiently in
advance to auto-enroll them in a Part D plan before they lose Medicaid
drug coverage. Alternatively, continue Medicaid drug coverage for these
individuals until they are enrolled in a Part D plan.
Conclusion
Many of the problems and issues described above arise from or are
complicated by the number of plans available and the fact that each
plan has its own design, including formulary, transition processes,
exceptions and appeals processes. Virtually no uniformity exists or is
required.
Even after beneficiaries, their families, and their advocates spend
hours and days on the phone trying to resolve issues with their Part D
plans and with CMS, there is still no guarantee that the problem will
be resolved. Our client, Mary F., from Willimantic, Connecticut,
exemplifies the problem. She gets by on limited income, and it is not
unusual at the end of any month that she is down to her last $5 in
quarters for her laundry. She takes several medications, among them a
pain reliever for severe gout. She is on ConnPACE and a Medicare
Savings Program. She has documentation that she was awarded the full
100% low-income subsidy, and thus should be paying $2 or $5 for co-
pays. However, Medicare has informed her plan that she qualifies for a
partial subsidy, with 15% co-pays. Mary cannot afford to pay even
ConnPACE's $16.25 co-pays and, therefore, has gone without a new pain
medication her physician prescribed a week ago. She is owed over $70 in
co-pay overpayments to her pharmacy and has been told it may take up to
10 weeks to be reimbursed. Despite repeated efforts on the part of the
Center, as well as CMS's intervention in this case, the problem
persists.
Overall Center for Medicare Advocacy Recommendations: Create a
single, standard Medicare prescription drug benefit, administered by
the Medicare program, that is uniform nationwide. Require CMS to
oversee the program with mandatory due process standards.
Thank you for the opportunity to submit this written statement. We
look forward to working with Congress to ensure that elders and people
with disabilities have access to a meaningful and affordable Medicare
prescription drug benefit.
Judith Stein
Executive Director
Patricia Nemore
Senior Policy Attorney
Vicki Gottlich
Senior Policy Attorney
Statement of Shannon Collins, San Rafael, California
I am writing to give testimony regarding my experience with
Medicare Part D.
I became disabled 15 years ago due to back problems. I found myself
in the Medicare system at an early age, coming from excellent health
insurance that was paid for by my employer. As a disabled person my
Medi-gap options were severely limited. Given the few choices I had,
Kaiser's Senior Advantage Plan was my best option.
Prior to the start of the Medicare Drug Plan, Kaiser already
included a drug benefit as part of their Senior Advantage Plan. It has
changed form during the time I've been a member, but for the past two
years (2004 and 2005) the plan consisted of unlimited generic brand
coverage at a cost of $10 for a 100 day supply. (This cost was the same
whether the drugs were picked up at a Kaiser pharmacy or obtained
through mail order.)
With the advent of the Medicare Drug Plan my monthly membership
premium increased from $70 to $101. The co-payments for generic drugs
tripled to $30 for a 100 day supply if picked up at the pharmacy. If
obtained through mail order, the cost is $20 for a 100-day supply--
still twice as much as it cost last year.
Although brand-name coverage has been added, the copayments are
quite steep--$120 for a 100-day supply if picked up at the pharmacy,
and $80 if obtained through mail order. Unfortunately, Kaiser has also
added the infamous ``doughnut hole'' so I am doing my best to avoid
brand-name drugs because their higher price will put me on the fast
track into that hole.
Diazepam is one of the generics I take. It's in a class of drugs
known as the ``benzodiazepines.'' I've used diazepam for many years to
help with muscles spasms and migraine headaches. I'm intolerant of many
drugs, and this one has been a lifesaver for me. Until this year I was
always able to get it through the Kaiser pharmacy. However, for
questionable reasons, Medicare has opted to exclude the benzodiazepines
from their formulary. Rather than wade through the appeals process, I
am purchasing the drug at Costco (the cheapest source I've found).
When I contacted Kaiser about my rate increases they blamed
Medicare. When I contacted Medicare, they blamed Kaiser. In fact I'm
not certain who is responsible; I just know I'm paying two to three
times more for my prescriptions than I did last year--and I know I'm
not alone. Although some people are benefitting from this plan,
millions are not.
I would like to see the enrollment deadline for Part D extended
through the end of this year. Then I would like to see the plan
overhauled, starting with making Part D a part of traditional Medicare
where drug prices are negotiated and the doughnut hole eliminated.
Perhaps then, this mess that's been called a benefit, might be on it's
way to truly becoming one.
Statement of Therese Emerick
Thank you for the opportunity to submit my testimony regarding the
implementation of the Medicare Part D prescription drug program. I
appreciate the steps that Congress and the administration has taken to
ensure that people with Medicare have access to medically necessary
medications, including the extension of the 2006 transition period and
the special enrollment period for people who qualify for the Extra Help
low-income subsidy program.
While I do not officially represent an organization, but I know
that I am not alone in my sentiments or experiences. The comments below
arise from my own experiences with the new Medicare prescription drug
program.
At the age of nine, I began having grand mal seizures. For the next
eight years, I tried numerous anti-convulsants, none of which
controlled my seizures. Once, I even had a toxic reaction to a then
commonly prescribed anti-convulsant. At age 17, my seizures were
finally controlled by the following regimen: Dilantin Dispense as
Written (DAW), Tegretol (DAW), and Phenobarbital. With these medicines,
I was able to go about my life in a normal way. I graduated high school
and completed my bachelor's degree from Wayne State University in
Detroit, Michigan.
At age 31, I sustained a traumatic brain injury on the job leaving
me unable to continue working. Shortly thereafter I was deemed eligible
for Social Security Disability and Supplemental Security Income (SSD/
SSI) making me eligible for Medicaid and two years later Medicare. My
monthly income is approximately $620.00 per month which includes my SSD
and SSI. In addition to that, I receive approximately $100.00 per month
in food stamps, and currently hold a Section 8 housing voucher.
I am one 6.2 million people moved overnight from Medicaid
prescription drug coverage to a private Part D prescription drug plan.
Prior to January 1, I had good, affordable, reliable health
insurance coverage through Medicare and Michigan Medicaid.
The Transition to Part D
In July 2005, I received a form letter from the Michigan Department
of Community Health (MDCH form B 05-05) that read:
``The Federal Government is changing how your drugs will be
covered. Starting January 1, 2006, Medicare will pay for your
drugs instead of Medicaid. Look for information that Medicare
will mail to you. Your costs will depend on which plan you are
enrolled in. Later this fall Medicare will assign you to a drug
plan. You can then:
``1) Stay in the plan that Medicare assigns to you;
or
``2) Pick a different plan that covers your drugs.
``Help is free and a phone call away.
``The letter then referred any questions to 800
numbers to the following agencies:
``Michigan Medicare/Medicaid Assistance
Program, Medicaid Beneficiary HelpLine,
1-800-MEDICARE or the Medicare Web site at
www.medicare.gov.''
I contacted of the all agencies listed in the letter. I looked at
the Medicare Web site. I received no clear answers about how this would
affect prescription coverage under Medicaid.
When I asked my caseworker, she told me that ``We are still waiting
for the details of how this is going to work.'' When I contacted my
state and federal representatives and I similarly was told that the
details have not been worked out.
In November, I received a letter notifying me that I was enrolled
in PacifiCare's Part D plan. Per the letter's instructions, I called
the plan repeatedly to determine whether or not my prescriptions would
be covered, but I was unable to get through to a counselor.
When I finally did speak to a representative, I was told that I had
to check my medicines on the plan's Web site. At the time, my computer
was being repaired, and, access to the Internet at the public library
is restricted, leaving me unable to check my medicines with those
listed on my assigned plan's formulary.
Further complicating this transition, in December, I caught a virus
that had the symptoms of a severe cold. Even though I was sick, I
continued to call the Medicare helpline and my plan repeatedly to find
out more about the Part D coverage that I was assigned to. Again, there
were long hold times. In many instances, I hung up in frustration. I
tried calling these help lines at different times of the day in order
to reach a real person, but I was unsuccessful.
Finally, I went to the Family Independence Agency and discussed the
situation with my caseworker. With her help, I reached a plan
representative who explained I would be receiving a card in the mail.
I did not receive my card until the first week in January, a couple
of days after I had called in my prescriptions for January. The
pharmacy needed to see my membership card before they would dispense my
medicines so I had to wait two days until my enrollment packet arrived
in the mail. Luckily, I had stockpiled some of my medicines, so I did
not have to go without.
The thought that I might have to go without my medicines was
terrifying.
Currently under Part D
For now, I am receiving all of my prescriptions through my Part D
plan. I pay $8.00 in copayments every month. That amount is more than I
paid prior to the transition. Previously, I paid $1.00 per
prescription. The increase in price may seem like a small amount to
most. Due to the amount that I receive monthly ($620.00 SSD/I), I have
had to make hard choices including, but not limited to, paying my
utilities bills late or making partial payments (resulting in my
incurring repeated late charges), eating and medicine.
I will not go without the necessary medicines that is needed to
control my epilepsy. The consequences of going without could invoke a
condition called ``status eppillepticus.'' Status epillepticus is non-
stop seizures that require immediate hospitalization. It is often
fatal.
Recent Correspondence From PacifiCare
I recently received an Explanation of Benefits (EOB) from
Prescription Solutions from PacifiCare. It reads in part:
Amount Paid For Prescriptions
``You and/or others who have paid for your prescriptions have spent
$334.47 in co-payments and/or co-insurance this year. In addition, this
amount also includes any extra help that you get paying for your drugs.
This amount may include payments made by your current or former
employer/union, other insurance plan or policy. This counts toward your
initial coverage limit.
Prescription Solutions from PacifiCare has paid $288.67. These
payments count toward your initial coverage limit.
Together $623.04 has been paid by Prescription Solutions from
PacifiCare, you and/or others. This is the total that counts toward
your initial coverage limit.''
The different amounts listed cause me a great deal of concern. I
have received information from multiple sources providing me
conflicting information about whether or not I will fall into the donut
hole--pay 100% of my prescription drug costs.
I do not understand why three different amounts are listed in the
correspondence from PacifiCare. Nor do I understand other terminology
that is being used in the letter and how it applies to me.
Solutions
Part D needs to be reformed so all that are eligible will receive
the medically necessary prescriptions at an affordable cost.
First, an extension in the enrollment period is needed for those
who are eligible. Determining which of the many plans offered best suit
their needs and budget require a detailed understanding of computer/
internet use, the technicalities of pharmaceuticals and the regulations
on each policy. In addition, those who are eligible for Part D should
not be forced into choosing a program that may not suit their needs out
of the fear of increased premiums, or lack of coverage until the next
enrollment period. Finally, an example of the penalty information was
listed on the medicare.gov Web site as opposed to the penalty formula.
(http://www.startribune.com/484/story/400980.html)
Second, the donut hole must be eliminated. Michael Leavitt,
Secretary of Health and Human Services, gave a reason for the
elimination of the donut hole. He recommended that ``insurance
companies to allow patients to have more than a month's supply of
prescription drugs on hand at a time, in case of emergency.''
(http://www.casperstartribune.net/articles/2006/03/11/news/wyoming/
0af12a4b085e81da8725712e000501c8.txt)
It is impossible for those on a fixed income after they reach the
donut hole, to obtain their medicines, as their prescriptions are
unaffordable.
Third, the heavy reliance on ``step therapies'' that were described
in reports by Rep. Henry Waxman should be not applicable to those who
have a documented medical history in which step therapies prolonged an
illness.
Fourth, the insistence on the use of generic drugs must be waived
if it has previously been documented in one's medical history that
generics do not alleviate symptoms of a serious medical condition. A
second reason for this is the situation that many prescription drugs do
not have a generic equivalent. Yet another reason would be if a person
had previous medical documentation of a sensitivity/allergic reaction
to a generic drug. Extensive medical expenses can be incurred in
determining if, in fact, any other type of medication/a different
course of treatment would suffice.
Fifth, the appeals process needs to be streamlined and
standardized, with the goal of its elimination. Many who currently have
Part D have been taking the same medications for years. Sudden changes
or withdrawals from certain medications can cause serious health risks
that can be fatal.
Part D must provide coverage for all necessary medications. It is
not the place of any insurance carrier to second-guess medical advice.
It is the function of a Part D insurance carrier to provide reliable
prescription coverage at an affordable price.
According to a BBC report, dated June 27, 2003, President Bush made
the following claim. ``Seniors have waited too long for more choices
and better benefits, including prescription drug coverage, similar to
the kind now enjoyed by federal employees and members of the
Congress.''
(http://news.bbc.co.uk/2/hi/americas/3026856.stm)
Due to the five restrictions/limitations on Part D, it is not
similar to the benefits and prescription coverage ``now enjoyed by
federal employees and members of the Congress.''
Elected officials are public servants, representing their
constituents. In effect, their constituents are their employers. One of
the essential functions of a job description could read: to represent
the will of the people in this country and to vote their concerns on
issues that have a direct impact on their health and well being.
Taking that analogy a step further, it is necessary to ask a
question. Why should the employee be compensated with a better health
care package that is paid for, in tax dollars, by the employer, with
many of the employers having substandard, if any health coverage?
The answer is that establishing a single payer health care system,
including prescription, dental, and vision/optical coverage is
necessary. This would result in the savings of approximately $286
billion in paperwork alone, according to Physicians for A National
Health Program (PHNP). (http://www.pnhp.org/news/2004/january/
national_health_insu.php)
The ideal single payer health care system would not require prior-
authorizations for prescriptions, would eliminate pre-existing
conditions and/or other regulations that interfere with the best
medical advice of his/her physician when determining the necessary
course of treatment.
To achieve the goal of a single-payer health care system, it is
necessary to recall the words of the late Walter Reuther, to the
American Public Health Association, in 1968:
``We must first free ourselves of the illusion that we really have
a health care system in America. What we have is a disorganized,
disjointed, antiquated, obsolete non-system of health care. Consumers
are being required to subsidize a non-system that fails to deal with
their basic health care needs and the cost of that system is continuing
to skyrocket.'' (http://www.uaw.org/atissue/atstory.cfm?atId=129)
Statement of Linda Fullerton, Social Security Disability Coalition,
Rochester New York
Disabled and senior citizens definitely need a prescription drug
plan under Medicare, but Part D as it is now, is a failure. Under my
HMO Part D plan, I pay more now for each drug I need, than on my HMO
provided drug plan before Part D took effect. My monthly HMO premium
doubled, and I still have additional co-pays for each drug, with less
choices. I recently got major sticker shock when I went to my pharmacy.
I was told that one drug I was just prescribed would cost me over $100
since it was not on my drug plan's formulary. I was instantly forced to
make a decision that I never had to before. Do I not eat for 2 weeks,
go without health insurance for two months, or do without two other
medications I need for a year? Since I am on Social Security
Disability, my only choice was to do without the $100 medicine and walk
out. As a result of this experience and many other horror stories that
I have heard I have come to the following conclusions:
Currently disabled Americans are forced to wait 2 years to be
covered under Medicare A, B, or D. That needs to change. Coverage under
all parts of Medicare must start immediately for them, upon disability
date of eligibility.
There should never be penalties for those who do not enroll in
Medicare Part D or any other portion of the Medicare program. Medicare
is supposed to be there to keep people healthy, not force them into
having coverage, and penalize them into poverty for the rest of their
lives, if they miss a sign up deadline. Medicare should be a healthcare
program that rivals any private insurance coverage offered, and one
that people would rush to sign up for on their own without the fear of
penalties.
Give Americans continuous TOTAL drug coverage by removing these
deductibles and gaps in coverage:
Currently you pay 25% of your yearly drug costs from $250 to
$2,250, and your plan pays the other 75% of these costs.
Then you pay 100% of your next $2,850 in drug costs.
Then you pay 5% of your drug costs (or a small copayment) for
the rest of the calendar year after you have spent $3,600 out-
of-pocket.
These sorts of stipulations are very confusing and harmful to those
who desperately need life saving prescription medicines, especially
those with terminal or chronic illnesses that can least afford it.
Revise the Part D plan to allow Medicare beneficiaries to enroll in
a SINGLE drug plan provided directly by Medicare so that premiums,
deductibles, and co-payments, would be the same for everyone. This drug
plan would be the same as the one currently in place for all other
Medicare benefits. Those who want to enroll in a private plan for drug
coverage could still do so, just as is allowed for other Medicare
benefits. Under this proposed plan Medicare could only remove drugs
after one year and must set up simplified appeals procedures so
doctors/patients would always be guaranteed access to ALL medicines
required to insure proper healthcare for patients.
HMO's are getting huge drug contracts under the current plan but
not passing on the savings to consumers. Many are even paying more for
their drugs than they were before Part D took effect when co-pays and
premiums are factored in. They are also forcing their subscribers to
use their Part D plans or lose their health insurance coverage in their
HMO plan. This practice should be made illegal as it restricts a
patient's ability to shop for the best Medicare Part D plan to suit
their needs.
The current Medicare Part D plan is is an outrageous sell out
(pharmaceutical payola) to the drug companies as there is no provision
for Medicare to shop for the best drug prices. That needs to be changed
to allow Medicare to freely shop for the most cost efficient medicines
and increase the types of medicines available on the Part D formulary.
Medicare must also work with the FDA to lower the amount of time that
drug companies can hold patents so that more generic drugs are
available in the marketplace which would lower drug prices across the
board.
Congress should also pass Federal regulations (similar to those
governing the tobacco industry) that prohibit the pharmaceutical
companies from advertising their ``prescription only'' products to the
general public, as this has greatly driven up the price of medicines in
order to pay for these types of ``commercials.''
During the Medicare Part D sign up campaign there has not been
enough properly trained staff to answer questions accurately or in a
timely manner. Congress needs to fund this program properly so more
well trained staff are put in place to handle the increased work load
that the Medicare Part D implementation has imposed on the Medicare and
Social Security programs. These increased staff levels must be
maintained for Medicare as a whole and Social Security, even after the
intial signup dealine has passed, since the number of people eligible
for these benefits is only going to increase over time as the American
population ages at a faster pace compared to decades of the past.
Many disabled and elderly citizens are still having to decide
whether or not to eat, pay heat/utility bills, give up other
necessities in life, or go without their medicines instead. This is
America, and there's no excuse for anyone in this country, to be forced
into making those sorts of agonizing choices. In closing please keep in
mind, as we will be sure to, that this is a crucial election year for
many Congressional positions. Your ability to reform this vital
healthcare program in an expedient manner, will be a very important
factor in our voting decisions come November. Thank you for your time.
______
Sign the Social Security Disability Reform Petition--read the
horror stories from all over the nation:
http://www.petitiononline.com/SSDC/petition.html
Social Security Disability Coalition--offering FREE knowledge and
support with a focus on SSD reform:
http://groups.msn.com/SocialSecurityDisabilityCoalition
Please check out my website at:
http://www.frontiernet.net/ lindaf1/bump.html
``I am disabled and my vote counts too!''
Durham, North Carolina 27707
May 2, 2006
To the Honorable Members considering ``D''
I am 69 years old, born January 26, 1937, supposedly retired, still
working, even with Social Security, because I believe those who have
been more blessed must help those less advantaged.
After I turned 60, like most folks, my health began to deteriorate,
although it is improving since January 2005; I've lost 62 pounds on the
South Beach Diet and I swim 30 laps every two days. By doing this, and
thanks to daily doses of Beta Blockers, HCTZ, Lipitor, Colazol,
Lisinopril, Protonix, Plavix, Aspirin, and Coreg I have been able to
eliminate the Insulin, Glipizide, and Metformin I was taking for my
Type II Diabetes and reduce my cardiovascular medicines by 50%, despite
the fact I had a very irreguler cardio rhythm in 200 that required
Cardio-version, that's when they give you general anasthesia, hit you
with a 100 volts stopping your heart; it took them 200 volts to start
it back.
On January 1, 2006 I chose to drop the AARP J Pharmaceutical
Supplement (50% Co-pay up to $3,000) and pick up D. On March 5, 2006 I
hit the ``doughnut''; that day three of my drugs for 30 days cost me
almost $400.00; this month they'll cost me close to $1,000. It turns
out that the most expensive drug, Colazol, manufactured right here in
the RTP by Salix Pharmceutical costs me and medicare about $2.00 for a
750mg capsule; the same drug, purchased by my sister, married to a
British Diplomat at The Conseil d'Europe, is less than one third of a
Euro, about $0.40. Now folks, there is no reason for America to pay
four times what every other country in the world pays for drugs made in
our own back yard. Think about it; it is just stupid to allow this
Administration not to be forced to demand equal to lowest global price
purchasing.
Gentlemen, please, stop taking contributions when you run for
Congress from the Pharma Lobbiests; wake up and smell the roses. Come
November there will be retribution for this really unfair
pharmaceutical pricing to the American elderly.
If Bush and Cheney are not working hand in glove with the
petrochemical cartel to allow ridiculous pricing on imported oil there
is not a cow in Texas; everyone knows his family is in partnership with
the Saudi rulers and Aramco as well as with the Emir of Kuwait. If you
think the dollar is in trouble now, just wait; in three months several
major middle eastern producers will be demanding payment in Eoros and
will not accept dollars. The day that happens the dollar will exchange
at about $4000 for E100! Our purchasing power in global markets will be
nil. It is really amazing how we could have again be sucked into a
ground war in Asia that we can not win; we did not learn a thing from
either the British or the Russians; people that don't read history, or
listen to their own intelligence assets or analysts, are doomed to
repeat all the old, dumb, mistakes.
By the way, if you were to slap a 10% surcharge on net taxable
income above $360,000 up to $600,000; and a 20% surcharge on
incremental earned and investment income above $600,000, re-instate a
10% inheritance tax on estates with FMV above $2,000,000; and increase
Capital Gains taxes to 20% on assets held less than 5 years, and
eliminate Social Security and Medicare Taxes, your pro-form Federal
Budget for fiscal 2007, including free basic medical and Rx for all,
and doubling Veterans' benefits, would go from a trillion dollar
defecit to a $500 billion dollar surplus. Do what is right and not what
is politically expedient to pay off your major contributors.
Thank God and the United States Congress that this great nation
requires that our Metropolitan, Regional, and Community Trauma Centers
and Emergency Rooms must give free timely treatment to all sick and
injured people irregardless of whether they have any money or medical
insurance, but please, again, wake up and smell the roses. These City
Class A Trauma and disease centers are overwhelmed. 40% of their
incoming case load has zero insurance, and a large majority of the
balance is either on Medicare or Medicaid.
For God's sake NOW PROPOSE AND PASS A NATIONAL FEDERAL 100%
PHYSICIAN MANAGED NATIONAL HEALTH INSURANCE BASIC DIAGNOSTIC AND
TREATMENT COMPREHENSIVE CARE SYSTEM. DEMAND THAT THE ADMINISTRATORs,
SUPERVISORS, and AUDITORS ONLY ARE PAID 10% IN TOTO FOR MANAGING THE
PROGRAM. FUNDED IT WITH INCOME TAX ONLY. GIVE THE MONEY TO THE STATES,
DISTRIBUTED BY POPULATION, STATE BUDGET INCREASE MODIFICATIONS BASED ON
UNPREDICTABLE NATURAL AND CIVIL DISASTERS. PLEASE, JUST TELL THE
PHARMAS THE UNITED STATES WILL ONLY BUY PHARMACEUTICALS AT THEIR LOWEST
MATCHED PRICE SOLD ANYWHERE IN THE WORLD.
BAN CONFLICTED ``GIFTS'' TO CONGRESSIONAL LEADERS, MEMBERS,
SENATORS, AND COPY THE FRENCH WHEN IT COMES TO CAMPAIGN REFORM. THE
GRAFT, and PAYBACKS, SMELL!!!
Have a Great Day. Good Luck!
W.M. Harrison Jr.
Joint Statement of Health and Disability Advocates and Make Medicare
Work Coalition, Chicago, Illinois
Created shortly after the passage of the Medicare Modernization Act
of 2003, the Make Medicare Work Coalition (``MMW'') is headed by three
principal partners headquartered in the Chicagoland area: Health &
Disability Advocates, AgeOptions (formerly known as the Suburban Area
Agency on Aging) and the Progress Center for Independent Living. The
Make Medicare Work Coalition was organized to respond to the
significant challenges posed to states, Medicare consumers and health
care providers by the Medicare Modernization Act of 2003. The MMW's
goal is to marry public policy development with targeted education,
outreach and enrollment efforts. In addition to the three principal
partners, the Make Medicare Work Coalition includes over 500 service
providers representing thousands of individual advocates in Illinois,
all of whom have been assisting Medicare beneficiaries on a daily basis
in navigating the new Part D benefit.
Together, our membership has counseled and advised hundreds of
thousands of Medicare beneficiaries on Part D throughout the state of
Illinois. In addition, the policy group has been involved in all major
public policy issues involving implementation of Part D on a local and
national level. This includes working to assure a smoother transition
for dual eligibles to Medicare Part D, the continuation of Patient
Assistance Programs, assisting AIDS Drug Assistance Programs nationwide
in changing their programs to work with Part D, and supporting the
efforts of the state of Illinois in its design of coordination and
implementation of Illinois Cares Rx (the qualified State Pharmaceutical
Assistance Program in Illinois) with Medicare Part D.
It is through this direct experience of working together to assist
Medicare beneficiaries throughout Illinois that we submit the following
observations and recommendations on improving the Medicare Part D
benefit:
1. CMS should extend the May 15 deadline for enrolling in
Medicare Part D. Or, in the alternative, all late penalties for
the calendar year of 2006 should be waived.
The roll-out of Medicare Part D is the largest expansion of a
public benefit since the 1960's. While there are strong
differences of opinion on many issues regarding Medicare Part
D, all agree that it is important for beneficiaries to make an
informed choice about enrolling in a Medicare Part D plan. Our
Coalition is working with Medicare beneficiaries everyday to
assure that these informed choices are being made. But, at an
average investment of 1 hour of uncompensated time per
beneficiary, we are running out of time. And, we have not
reached everybody.
Six and a half million of the sixteen million or 40 percent
of Medicare beneficiaries who lacked prescription drug coverage
prior to January 1, 2006, still have not enrolled in a
prescription drug plan. Given these numbers, our job is not
done. By extending the deadline, our Coalition and others like
us throughout the country can reach more beneficiaries.
Naturally, beneficiaries are hesitant to sign up for a benefit
that is as complex as Medicare Part D is. Indeed, studies have
shown that even much simpler programs, such as food stamps, are
unable to sufficiently reach all of those that are eligible.\1\
We owe it to our Medicare beneficiaries to allow them more time
to navigate this system. It will only lead to increased
enrollment and a more robust program.
---------------------------------------------------------------------------
\1\ Access to Benefits Coalition, Pathways to Success: Meeting the
Challenge of Enrolling Medicare Beneficiaries with Limited Resources
(Washington: National Council on Aging, 2005) (citing several studies
on enrollment numbers in other public programs).
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If the enrollment deadline is not extended, the late
enrollment penalties should be waived the remainder of this
calendar year. Seniors and individuals with disabilities should
not be punished for failing to sign up for Medicare Part D this
year. That is unfair. Since its roll-out, Medicare Part D has
experienced many implementation problems, which is to be
expected. The problems experienced by dual eligibles and others
have been widely reported in the press and elsewhere, which is
also to be expected. Given this environment, it is inevitable
that many beneficiaries would be hesitant at this point to
enroll.
The only appropriate course of action at this point is to
institute a penalty grace period during this tumultuous
transition. The purpose of the penalty is to encourage
enrollment. This only works if individuals are aware of the
penalty. Right now, we would speculate that most individuals
who are not signing up for Part D don't even understand the
basics of the Part D program and certainly don't understand the
penalty provisions. Therefore, a lifetime penalty for failing
to enroll in the midst of all of this confusion is both unduly
harsh and nonsensical.
2. CMS has recently provided a Special Enrollment Period to
individuals who qualify for the Low Income Subsidy after May
15, 2006. If the May 15 deadline is not extended, CMS should
also provide this Special Enrollment Period to individuals who
qualify for State Pharmaceutical Assistance Programs such as
Illinois Cares Rx after May 15, 2006.
Recently, CMS has extended a Special Enrollment Period for
individuals determined eligible for the low-income subsidy
after May 15, 2006. CMS is to be commended for doing this. In
effect, this allows us more time to reach the hundreds of
thousands of individuals eligible for the low-income subsidy
and get them enrolled into the Part D Program.
The low income subsidy is one way in which individuals with
low-income can access Medicare Part D at an affordable price.
In Illinois, we have a second program that assists individuals
with Medicare Part D cost-sharing. It is the qualified State
Pharmaceutical Assistance Program (``SPAP'') called Illinois
Cares Rx. Illinois Cares Rx has more generous income and no
asset eligibility guidelines and, therefore, offers many more
low-income seniors and individuals with disabilities affordable
coverage under Part D.
Just as CMS has recognized that more time is needed to
identify and enroll individuals into the low-income subsidy
program and Part D, more time is also needed to identify and
enroll Medicare beneficiaries who qualify for Illinois Cares
Rx. In Illinois, enrollment in a Part D is not sufficient. To
maximize the benefit to low-income seniors, they have to be
enrolled in a plan that coordinates with the Illinois SPAP and
individuals should know that their enrollment is approved
before they are locked out of changing to one of these plans.
CMS did this to assure that low-income Medicare beneficiaries
are getting the comprehensive benefit to which they are
entitled. By extending the Special Enrollment Period to those
determined eligible for Illinois Cares Rx and other qualified
SPAPs, CMS would be assuring that even more low-income Medicare
beneficiaries are getting the most comprehensive benefit to
which they are entitled.
3. Congress must address the discontinuation of the
pharmaceutical company Patient Assistance Programs for Medicare
beneficiaries.
``But with the disappearance of the Patient Assistance
Plans, I will not be able to afford my cocktail. I will be like
I was when I was diagnosed with full-blown AIDS. I will start
losing weight. I will become very sick. My weight got down to
less than a hundred pounds at that time. I looked like a
walking corpse. . . . I will just be honest with you. I don't
think Alan Greenspan or Warren Buffett could figure out how to
make that $2200 a month work with what Plan D is saying that I
have to work with, and what I have to do.''
James Hayes, Medicare Beneficiary and PAP enrollee
``And right now, I am depending on Patient's Assistance,
which I have been told after May 15th will cease. I have
received the letters from the pharmaceutical companies. . . .
With high gas bills, electric bills, gasoline, and just general
living, you just have to make a choice. And right now, the
choice is okay, but a few months down the road, it is really
one that--what are you going to be able to do?''
Mr. D, Medicare Beneficiary and PAP enrollee
Prior to implementation of Medicare Part D, there was a
significant population of Medicare beneficiaries that relied
upon the pharmaceutical company Patient Assistance Programs.
These Programs provided reduced or no cost medications to
individuals who could not otherwise afford them. These Programs
are a critical lifeline to many Medicare beneficiaries living
with HIV, Multiple Sclerosis, cancer, mental illness, and other
conditions with high drug costs.
In November 2005, the U.S. Department of Health and Human
Service Office of Inspector General issued guidance that warned
the pharmaceutical companies about liability arising from how
their Patient Assistance Programs interact with Part D. In
effect, the guidance stated that if the current Patient
Assistance Programs were counted toward Medicare Part D cost
sharing, this may run afoul of anti-kickback and anti-fraud
laws. The guidance DID NOT forbid the Patient Assistance
Programs from assisting Medicare beneficiaries altogether. It
just told them that they must put certain assurances in place
in future operations of their Patient Assistance Programs.
Further guidance issued in April re-iterated that Programs
could continue. Some pharmaceutical companies, including Abbot,
Merck, Roche, and Schering-Plough have continued their Programs
for at least some Medicare beneficiaries.
Unfortunately, many other pharmaceutical companies have
decided to drop their Patient Assistance Programs. This will
have a devastating effect on the health of individuals quoted
above because Medicare Part D will not pick up the coverage in
the same way nor for the same income groups that the Patient
Assistance Programs did. For James, Dallas and Mr. D, Medicare
Part D is unaffordable without some help from the Patient
Assistance Programs. Their income is too high to qualify for
Medicare Part D ``extra help.'' And, their drug costs under
Part D are too high to be affordable. In some months throughout
the year, their monthly drug bill under Medicare Part D will
exceed their monthly income.
Prior to Medicare Part D, James and Mr. D were able to access
their life saving medications at affordable rates. Ironically,
as a direct result of Medicare Part D, they will no longer be
able to afford these medications.
4. All dual eligibles should be guaranteed a drug coverage
benefit that is equivalent to what is provided by Medicaid.
Dual eligibles in Illinois, and throughout the country,
received a comprehensive Medicaid drug benefit prior to January
1, 2006. These populations, in general, had the most to lose
from the shift to Medicare Part D and many of them are now
worse off than when they were before. Many of these low income
disabled and elderly individuals have now been automatically
enrolled into a Medicare prescription drug plan that does not
cover the medications they were on; imposes more restrictions
on the dispensing of their medication than under Medicaid; and
is costing them more in co-payments than they can afford.
The HHS Office of Inspector General found that many dual
eligibles in every state were auto-enrolled into PDPs that
covered far less than 100% of the most commonly used drugs.
These formularies and benefit structures are inequitable
especially as applied to populations who are least able to
choose on their own.
At a minimum, dual eligibles should have a drug benefit under
Medicare that is no worse than what they had under Medicaid.
Congress should mandate that PDPs offer a standard dual
eligible formulary and uniform benefit management tools. In
addition, Congress should exempt dual eligibles from the
Medicare co-payments which in many cases are significantly
higher than Medicaid.
5. AIDS Drug Assistance Programs (``ADAP'') should be allowed
to use funds to ``wrap around'' Part D and those expenditures
should count toward the out of pocket expenses needed to reach
catastrophic coverage.
ADAPs throughout the country have provided needed medications
to individuals living with HIV since their inception. With the
implementation of Medicare Part D, these Programs have been
assisting the Medicare enrollees in understanding Part D and
creating new program policies for interacting with Part D. ADAP
Programs were given the option to cover Medicare Part D
premiums, co-payments, and cost sharing. However, if ADAP does
pick up these costs, none of the cost sharing can count toward
reaching the Medicare Part D catastrophic coverage. Only SPAP
expenditures can count toward true out-of-pocket expenses.
Given these restrictions, the AIDS Foundation of Chicago, in
collaboration with the Make Medicare Work Coalition, advocated
for the passage of Illinois House Bill 4302, which is awaiting
the Governor's signature. HB 4302 expands eligibility for
Illinois Cares Rx, the SPAP, to include the ADAP formulary
drugs. In doing this, the state can cover the cost sharing for
Medicare beneficiaries and it will assist them in reaching
Medicare Part D's catastrophic coverage and a more
comprehensive benefit. To date, Illinois is the only state to
expand its SPAP in this manner, although some other states
already included HIV coverage in their original qualifying
SPAP.
While Illinois has taken the lead to do this, we still
strongly believe that this is not the ideal route to assist
individuals living with HIV. This route requires transferring
individuals to another new program, extensive education and
outreach to those individuals and state agency staff, and drug
coverage is spread across one federal and two state agencies
rather than one agency. It also involved the time and effort to
pass legislation. Ultimately, we believe it was worth it
because individuals will receive a more comprehensive drug
benefit under Medicare Part D by counting that assistance to
reach catastrophic coverage. But, there is much simpler way to
do this.
The law should be amended to allow ADAP expenditures to count
toward TROOP. In this way, ADAP coverage can assist individuals
in reaching catastrophic Part D coverage without having to jump
through all of the hoops associate with creating or amending an
SPAP. The quickest way to a point is a straight line. Here,
that straight line is ADAP coverage, not the complications
involved in setting up and transferring individuals to an SPAP.
6. Many of the difficulties experienced by Medicare Part D
enrollees in accessing needed medications are a direct result
of the Prescription Drug Plans failing to follow CMS guidance,
regulations, and the MMA Act itself. Strong and swift
enforcement action must be taken against the Plans to assure
that CMS guidance is followed.
``I am just one person who took the time for these
two people. The emergency room physicians don't have
time for this. Most doctors don't have time for this.
So what happens in the meantime is that patients don't
get their medications. . . . We finally got to where
people understand you have got to take your medicine
the way we say take it or you do everybody a
disservice. And now what happens? Boom. You can go to
the pharmacy and leave without your medications.''
Dr. O, physician, describing her ordeal with two different
insurance companies
Since its inception, widespread problems have been reported
in accessing medications under Part D. These problems include
charging of the wrong and higher co-payments, failure to
provide necessary medications during the transition period,
failure to provide medications that CMS has required all plans
to carry, difficulty in understanding benefit management tools
or how to comply with them and many other access issues. To us,
the problems have been too numerous to be considered ``isolated
incidents.'' Rather, we believe that they are evidence of a
larger systematic problem with the Medicare Part D system.
To put it simply, CMS has no control over what the
Prescription Drug Plans are doing because of the structure of
the contractual relationships between the plans, the government
and the Medicare Beneficiary. Over and over again, CMS issues
guidance and it is ignored. CMS assures individuals that
certain actions are not allowed, such as denial of medications
in certain classes. Time and time again, denials of these
medications occur. Because the contract for insurance is
between the plan and the Medicare Beneficiary, CMS claims that
it cannot enforce its recommendations and leaves advocates and
CMS with only the ability to solve one Medicare beneficiary's
problem at a time. Service providers report ``fixes'' in one
case and then the same exact wrongful action taken against
another a couple of days later.
When we discover a plan violating the law or guidance, we
report the issue to CMS. CMS staff have worked with us, one
person at a time, in resolving the issues. Unfortunately,
rather than acting with any authority or power to compel
compliance, it appears that CMS staff have the same exact
difficulties in resolving a plan's violation that we do. In one
case, a Coalition member worked with a CMS staff person for
over a week to get a plan to recognize a beneficiary's
automatic enrollment. Day after day, all this CMS staff person
could do is call the plan and make a request, just as we had.
The plan seemed no more inclined to listen to the CMS staff
person than it did the beneficiary or service provider. The
major advantage of the CMS staff person may be a greater range
of phone numbers.
With the introduction of so many plans at once, it is very
difficult to assure that each individual plan is following the
rules. But, CMS must. Just as CMS will enforce late enrollment
penalties against beneficiaries who fail to sign up for Part D
by May 15, we should expect that CMS demand compliance with its
guidance, the plans and the law that created Part D. It is not
enough to resolve issues one beneficiary at a time with simple
requests to the plans from CMS staff to follow guidance, which
has been CMS's operating mode for the first six months of this
program. Not only does this require hours of advocate and CMS
staff time, it provides no enforcement power in the future.
Rather, CMS must come up with clearer enforcement mechanisms to
implement and compel compliance with its guidance. It is not
sufficient to make suggestions and hope for the best, it
requires clear rule making, clear authority and clear and
efficient penalties to invoke when plans do not adhere to those
rules. If CMS could deal with plan violations quickly and have
a retinue of compliance measures related to the response of
those that violate those rules not just to one Medicare
Beneficiary but over all their enrollees, it would not be long
before these plan violations would decrease.
7. Congress has spent decades creating a cash assistance and
health care system for people with disabilities that encourages
employment. In its current form, Medicare Part D's extra help
eligibility discourages people with disabilities from seeking
employment and increasing their self-sufficiency.
Through the Ticket to Work and Work Incentives Improvement
Act (``TWWIIA'') and previous legislation, Congress, CMS, and
the Social Security Administration have created an elaborate
system of work incentives that encourage individuals with
disabilities to gain and maintain employment. For many
individuals with disabilities, loss of health care benefits is
the most often cited concern about returning to work. Because
of this, the TWWIIA and other legislation addressed the
continuation of healthcare for individuals returning to work
through extended Medicare and Medicaid eligibility and allowing
states to create Medicaid Buy-In Programs.
Unfortunately, Medicare Part D's extra help program as it is
currently constituted will provide a disincentive for some
(many?) individuals to gain employment. Unlike other health
care programs, the provisions of Medicare Part D's extra help
income forces some individuals to choose between employment and
health coverage. An increase in income from employment can
cause someone to lose ``extra help'' eligibility, forcing them
to use all or most of that employment income to pay Medicare
Part D cost sharing. In this environment, individuals will
choose to forgo employment to keep their ``extra help''
eligibility.
For example, Jim is a 40 year old Medicare beneficiary living
with mental illness. He currently has a monthly income of $900
from Social Security. He qualifies for Medicare Part D's full
``extra help'' and receives his 7 medications for $35 per
month. Prior to Part D, he received his medications from
Patient Assistance Programs, with a retail value of about $1000
per month. Jim has been seeking employment and found a job that
will pay him $1000 per month. Under current Medicare Part D
``extra help'' rules, if he accepts this position, he may lose
his eligibility for ``extra help'' in January of 2007. If he
loses this ``extra help,'' his monthly medication costs plus
premium under Part D may, during part of the year, be as high
or higher than his earned income. Given this choice, Jim may
decide not to work at all.
The current law should be amended so that Medicare Part D's
extra help mirrors Public Law 99-643's two special provisions
known as 1619(a) and 1619(b). Under these provisions, SSI
beneficiaries who lose their SSI due to work income are still
able to qualify for Mediciaid until their work income meets a
state specific threshold. In the same manner, individuals
enrolled in ``extra help'' should be able to maintain that
``extra help'' eligibility until their earned income reaches
that same threshold. By doing this, Medicare Part D will fall
in line with the rest of the public benefit system that is
removing barriers to employment and encouraging individuals
with disabilities to gain and maintain employment.
Statement of Barbara Kennelly, National Committee to Preserve Social
Security and Medicare
Madam Chairman and Members of the Subcommittee:
The National Committee to Preserve Social Security and Medicare
represents 4.6 million members and supporters. Our primary mission is
the preservation of these two critical programs for seniors, and
support for other programs that improve our country's retirement
security.
The National Committee has advocated for adding a prescription drug
benefit to Medicare for many years. We agree with President Bush and
Congress that modern medical practice has evolved to include a robust
use of prescription drugs, which keeps seniors out of much costlier
hospitals and nursing homes and results in a higher quality of life.
However, while we agree with Medicare coverage of prescription drugs,
we heartily disagree with the method the President chose to implement
this form of modernization. After listening to our members over the
years, we have concluded that the simplest and least expensive method
of adding prescription drug coverage to Medicare would be to simply
expand Part B to include prescription drugs--much as Medicare has been
expanded over the years to cover many procedures as they were adopted
into medical practice.
Since January 2004, when the Medicare Modernization Act (MMA) began
to phase in, we have heard from over 650,000 of our members, who have
signed over 1.8 million letters and petitions asking Congress to
overhaul the legislation. They are frustrated, confused and angry about
both the privatized Part D drug plan and about the impact of the MMA on
the rest of the Medicare program. What they want and need is a
traditional Medicare prescription drug plan which would provide them
simple, cost-effective coverage and affordable drugs.
What they got instead is a privatized prescription drug plan so
confusing and complex that millions of seniors have not enrolled. A
prescription drug plan which actually prohibits Medicare from offering
a drug benefit directly and negotiating for the lowest prices possible
for seniors. We applaud the Administration for alleviating the most
egregious effects of the ``lock-in'' provision by preventing drug
companies from dropping or changing the cost of a drug for
beneficiaries currently using the drug. However, Part D continues to
lack a guaranteed benefit, and insurance companies can still drop
medications seniors believed would be covered when they enrolled. They
can also raise prices even though seniors are locked into the plans for
an entire year. What seniors got when the Medicare Modernization Act
was signed into law was a prescription drug plan designed by and for
the insurance and drug industries, not this nation's seniors.
Despite how much the Administration attempts to pump up its
enrollment numbers by counting millions of seniors who have not
actually enrolled in Part D (e.g. those who already have better
coverage from another source), or who have been automatically enrolled,
the new program is clearly a case study in what can happen when a
privatized program is imposed upon seniors. While this is not the bill
we would have written, the National Committee has always accepted the
view that some seniors would benefit from this program, despite its
many flaws. For this reason, we have made intensive efforts to inform
seniors of the benefit, educate them on its intricacies, and provide
materials designed to guide them through the decision-making process.
We have done this through repeated mailings to our members, public
meetings, the creation of a Frequently Asked Questions booklet for
distribution, and through other materials both in print and on our
website. Despite these efforts, however, only about one-half of our
members who have responded to our surveys are enrolling in Part D.
The reasons for this are varied. Some seniors already have better
coverage through previous employers. Others are still confused about
the benefit, unsure which plan best suits their needs. They and are not
receiving the information they need from either the plan sponsors or
from CMS. The GAO report released yesterday offers a litany of
enrollment problems, including long wait-times at phone centers and
inaccurate information from both CMS and the plan information lines. We
have heard similar horror stories from our members as well.
But a significant number of seniors have done the math and realize
Part D is very expensive and inadequate. They simply cannot afford to
spend the extra money it would cost them to enroll. Proponents of Part
D are working particularly hard to pressure these low-utilization
seniors into the program, whether or not it makes sense for them
financially, because they are an essential part of the insurance risk
pool.
That is clearly the primary reason the Administration has, to date,
refused to extend the Part D enrollment date beyond May 15th. Millions
of seniors will either be pressured into enrolling in a program that
does not suit their needs or will face late enrollment penalties for
the rest of their lives, simply because proponents persist in promoting
a privatized drug benefit. Instead of acknowledging that these seniors
may be justified in refusing to participate in a program that is too
expensive and complex, the Administration appears determined to
pressure them into enrolling with the threat of lifelong penalties.
Despite how inadequate the drug benefit appears to many seniors
today, this is its high water mark, because coverage will become more
expensive with time. The lack of meaningful drug cost containment will
allow drug prices to continue growing faster than the economy in future
years. This makes it increasingly hard for seniors, many of whom rely
on Social Security as their primary source of income, to keep up.
According to the new 2006 Trustees Report, the national average Part D
premium is expected to reach almost $60 per month by 2015, and the
prescription drug deductible will grow from $250 to $475 per year. In
addition, CBO has estimated the $5,100 threshold for catastrophic
coverage will almost double, to over $9,000, in seven years.
The National Committee believes these problems can be avoided by
overhauling the program to allow seniors the choice of staying with
traditional Medicare for their prescription drug coverage. Relying on
the strength of Medicare beneficiaries' purchasing power to directly
negotiate prices would keep costs low. The Federal Government has a
long history of negotiating significant price discounts on prescription
drugs for both veterans and Medicaid beneficiaries. One study by the
Congressional Budget Office found that, on average, the Veterans
Administration pays only about 42 percent of the Average Wholesale
Price (AWP)--otherwise known as the suggested list price--for brand-
name drugs. Similarly, the Medicaid Rebate Program negotiated by the
Federal Government with drug manufacturers, pays only about 51 percent
of the AWP for brand-name drugs.
Several studies have shown that private Part D plans cannot deliver
the same low prices found in other federally-negotiated programs. One
study by Families USA found that the VA negotiated substantially lower
prices for 19 of the top 20 drugs prescribed to seniors, compared with
private Part D plans. Another study by the Minority staff at the House
Government Reform Committee found that the average drug prices offered
by the ten leading Part D plans were 84 percent higher than federally
negotiated prices (Federal Supply Schedule). A third study by the
Prudential Equity Group forecasted that drug companies could receive up
to $2 billion in extra profits in 2006 alone because private Part D
plans cannot match the low prices that the Medicaid program paid for
prescription drugs. Based on this study, a pharmaceutical economics
professor at the University of Minnesota has concluded that drug
companies could stand to gain $40 billion in extra profits over the
next decade unless Medicare is permitted to negotiate lower prices just
as the VA does.
But the MMA is not only a mechanism for enacting a drug program
that provides considerable financial benefit to the drug and insurance
industries. In passing the MMA, the President and Congressional
majority used the lure of prescription drug coverage as a smokescreen
for passing legislation intended to ultimately privatize all of
Medicare--a goal that the debate on Social Security shows us might not
have been supported by the American public had it been proposed
explicitly. This was done despite the success and popularity of the
traditional fee-for-service Medicare program, and despite the failure
of past privatization efforts such as Medicare + Choice. Not only is
the prescription drug benefit delivered only by private stand-alone
prescription drug plans or private Medicare Advantage plans, but the
law threatens traditional Medicare by providing numerous subsidies that
favor private companies over the traditional program and by
establishing a ``premium support'' demonstration that places the two in
head-to-head competition over price in a few short years.
The subsidies built into the MMA create an uneven playing field
that will siphon away healthier and wealthier beneficiaries into
private plans, while our country's most vulnerable seniors--those who
are among the oldest, poorest and sickest--are left in the traditional
Medicare program, where costs will keep rising. Although proponents of
privatization have argued that private companies can provide health
services to seniors less expensively than Medicare, actual experience
with private plans in Medicare has been unequivocal--private plans do
not reduce Medicare's cost, they increase it. And these extra costs
have been confirmed by the government's own estimates, as Medicare's
Actuary has estimated that overpayments to private plans under the MMA
would total $46 billion in the first decade alone.
Subsidizing private plans exacerbates the fracturing of the
insurance risk pool that has been essential to the success of the
Medicare program. It creates a downward spiral as increased costs--
including the costs of the subsidies themselves--are spread over a pool
of seniors that continues to shrink as younger, healthier beneficiaries
are enticed into the more profitable managed care plans. Because the
subsidies are mostly hidden from view, many seniors are unaware that
they are helping pay for the process that is undermining the only
universal, affordable health insurance they can rely upon throughout
their retirement.
The National Committee strongly believes that beneficiaries who
choose to remain in the traditional Medicare program should not be
asked to subsidize the inflated costs of private Medicare plans, nor
should they unknowingly be required to contribute to the dissolution of
the Medicare program. We also strongly believe that traditional
Medicare can outperform the private sector when allowed to compete on a
level playing field, using the purchasing power of America's 43 million
seniors to lower costs and to create broad risk pools that spread the
insurance burden among all beneficiaries. Savings achieved through a
strengthened traditional Medicare program should be used to reduce
costs to participants or further enhance benefits.
We urge Congress to revisit the Medicare Modernization Act before
this year's adjournment and implement the following four changes:
modify Part D so seniors can receive their prescription drug coverage
directly from Medicare and require Medicare to negotiate the lowest
possible drug prices; eliminate the lifetime penalty for seniors until
this confusing plan is overhauled; eliminate the ``lock-in'' by
prohibiting insurance companies from dropping medications or raising
prices while seniors are locked into their plan; and repeal the
government subsidies to private plans, using the savings to improve the
drug benefit for seniors.
Thank you, Madam Chairman.
Kewanee, Illinois 61443
April 25, 2006
Dear People:
I am a disabled 56 year woman who has multiple disabilities,
including depression, fibromyalgia and 3 kinds of arthritis. I take
drugs for ERT, Depression, Restless Leg Syndrome, constant pain, all
kinds of vitamin and mineral supplements (which are not included in any
reimbursement program, even though I need them medically after having
had Roux-en-Y gastric bypass surgery) and ADD And, to top it all off, I
have developed hypoglycemia as a direct result of the gastric bypass
and must eat certain food (which do not include anything that is less
expensive . . . I cannot eat rice, pasta or bread). Since I am
disabled, and not yet 55, my choices for help (both for RX and medigap)
are very limited to two or three companies. I have had Humana Gold, and
I have one primary care (at $20 a visit), and each specialist (6 of
them) are $35 a visit. I have been on several of the drug companies
``helping hand'' programs, where I got my drugs for nothing or a small
fee. All of those programs have been discontinued because of Medicare
D. The Humana program is covering most of the drugs for a $5, $30 or
$60 copay. My tests are 20% of charge copay. When I reach the 3rd tier
for the drugs, it will be even more expensive. I am spending, between
doctor's visits, drug copay and test co-pay, almost $400 a month. I am
between a rock and a hard place and have had to dip into my 401K and
will have to pay taxes on my withdrawals next year, and have no idea
where I will get that money. I also have very little 401K left, so have
only about 2 more months of payments to make easily, then I will be
struggling to make ends meet. As it is, I do not go out much, and when
I do, my brother and sister-in-law usually pay my way, and I feel like
I cannot take care of myself (and after a lifetime of not depending on
anyone, it is a blow.)
So, the upshot is that this new program is unacceptable. It is
confusing (to say the least) and intolerably convoluted at best. I am
not sure who actually invented this program, but I am sure it was
someone who was either brilliant (we are talking Einstein here) and
wanted everyone else to know how brilliant, as he (or she) would be the
only ones to be able to figure it out, or someone who was tied to drug
companies to make it as complicated as possible, so they would end up
with more money.
Because I had to wait two years for Medicare to kick in, I was in
great financial straits trying to pay for all the medical needs I had,
but was so relieved when Medicare kicked in. I am not so relieved
anymore. ``D'' has made it impossible for me to continue on the free
(or low cost) individual drug programs I was on. Humana has changed
their formulary twice in the last 3 months, and I have to tell you, I
am almost positive that once the 15th of May comes along, and we are
not able to switch, the formulary on every single Medicare ``D''
insurer will change again. This is probably the worst system you could
have implemented.
I urge you, at the very least, to please extend the May 15th
deadline. I urge you to follow through and actually simplify (not
complicate) the program to an extent that everyone can understand it. I
have a BS degree, and even with having a degree in BS, I cannot make
out what was the ultimate goal of this program.
I am also worried about those of us who are confused or forgetful
or challenged with mental illness not under control with medication.
Mine is under control (at least at the moment when I can afford my
meds), and I do not understand these ill-defined rules and regulations,
so there is no hope for those who are the slightest bit confused.
Please, I urge you:
1. Extend the deadline for sign up to August at least.
2. Do not penalize those who have not signed up with a
``forever'' monetary penalty.
3. Revise this mess and make it comprehensible, and easy to
interpret.
Thank you for your time. If you have any further questions or wish
any further comments, please feel free to contact me below.
Alice Rose Kieft
Salt Lake City, Utah 84106
May 1, 2006
House Ways and Means Committee
I am not an enrollee in this plan. I have no immediate plans to
enroll. This plan was hastily and poorly constructed along partisan
lines with significant special interest pressure placed on House and
Senate members by the powerful pharmaceutical industry.
The Plan is complicated and complex. All legislative members should
learn a simple lesson from the computer programming industry in their
very powerful and simple acronym--K.I.S.--simply translated as ``Keep
it Simple.'' Often they add another ``S'' to the expression--standing
for ``Stupid.'' Very appropriate for the outcome of this terrible piece
of legislation, which ultimately hurts constituent citizens, but
certainly enriches the pharmaceutical firms.
The Plan was written the way it was, I believe, to continue the
pharmaceutical companies' continued political contributions support to
many if not most of the Nation's elected representatives. This is
obvious to me as there is no provision to negotiation of pricing. The
pharmaceutical firms will charge what they wish. This is a major
weakness which I hope will be overcome. Until it is, we will continue
to see many more States taking the position of implementing their own
plans, thereby weakening any centralized attempt to potentially benefit
the entire citizenry of the Nation.
I resent the undue influence of special interests which predominate
in all phases of the House and Senate business. It is about time that
all of our elected representatives get back to the basics--governing
our Nation with the interest solely being that of the Nation and its
citizenry, and not their desire to be re-elected with special interest
funding.
Sincerely,
George J. Mierisch
Huntington, New York 11743
April 28, 2006
Representative Nancy L. Johnson
House Ways and Means Committee
Health Subcommittee
1100 Longworth House Office Building
U.S. House of Representatives
Washington, D.C.
Dear Representative Johnson:
I am a twenty-eight year old woman with cognitive and psychiatric
disabilities living in Long Island, New York. I would like to share my
experiences regarding the Medicare Part D benefit as part of the May 3,
2006 hearing. As a ``dual eligible'' receiving benefits from both
Medicare and Medicaid, I have experienced numerous difficulties
stemming from the new benefit.
I fervently wish that Part D had not come into existence. I take
ten prescription medications, and was much better off when they were
covered by Medicaid. During the many years when I received drug
coverage through Medicaid, I fell into a special category and thus paid
no copays at all. My sole sources of income are SSI and SSDI, and even
the small copays required under Part D have forced me to rearrange my
budget, leaving less money available for such necessities as groceries
and clothing.
While I am in fact losing money under Part D, the government has
arbitrarily determined that I am saving money. As ``everyone'' is
``obviously'' ``benefiting,'' my food stamps have been reduced. The
judgment that I can afford this was arbitrary. Evidently, I am being
``lumped'' into a category with many others, with no effort to
investigate my situation. My need of a subsidy to help pay for Part D
hardly implies that I need no further assistance from the government.
Since my Medicaid prescription drug coverage ended December 31,
2005, my participation in Part D was made mandatory. Were I have opted
out of Part D, I would have lost my Medicaid benefits, though I was
better off beforehand. How can people like me obtain independence if
the option to pick and choose individually appropriate benefits is
removed? The government automatically enrolls dual eligibles in a plan
with a premium below their region's benchmark. A plan is randomly
selected; no regard is given to the medications taken by the enrollee
or the pharmacy s/he uses. Not surprisingly, the plan into which I was
auto-enrolled included neither my pharmacy in its network nor covered
all of my medications, so I was forced to switch. It seems to me that
the government is not particularly concerned about placing dual-
eligibles in plans suiting our needs. Rather than make the effort to
assist people like me with appropriate placement, officials have merely
ducked their responsibilities and have decided to funnel us into plans.
If we are not happy with them, it is our responsibility to change,
because the government has ``taken the easy way out.''
Meanwhile, I was making phone calls and conducting research. Even
though I had automatically eliminated plans above the benchmark, I
still had many others to investigate. I had a great deal of difficulty
sorting out the information. The process took me three or four months
due to the complexity of the situation and the problems I encountered.
For instance, I found that the CMS Formulary Finder often listed a drug
as covered by a plan and was thus at odds with the plan website. In
other instances, there was a discrepancy between the two regarding the
use of drug utilization management techniques (quantity limits, step
therapy, prior authorization) for a drug. I had to create numerous
charts and lists of my own in order to keep track of all the
information.
Some of the plans had to be rejected because their formularies
indicated that they did not cover some of my antipsychotic or
antidepressant medications, even though CMS has determined that all of
these medications must be covered. Other plans did cover them, but used
drug utilization management techniques to manage their use. It is my
understanding that plans are not permitted to apply these techniques to
drugs in certain categories (including antidepressants and
antipsychotics), with few exceptions. Since CMS supervises and manages
Part D, it is responsible for ensuring that the plan sponsors adhere to
the regulations it establishes.
Since I am eligible for a full subsidy, I called plans in order to
determine my copays. Many plan websites did not include the
information. Some were not even working as of November 15, the first
date of enrollment. Due to a misunderstanding, I mistakenly believed
that I would have different copays under different plans. Many of the
people I spoke to did not know how much I would pay, or the information
differed from plan to plan or even between two representatives of the
same plans. The matter was eventually clarified. Additionally, when
discrepancies between the Formulary Finder and plan websites
necessitated a phone call, different representatives from the same plan
would supply me with different information. This is indicative of a
lack of coordination between CMS and the private insurance plans, as
well as among the plan employees themselves, and that is inexcusable.
Once I had selected a plan, the United Healthcare-sponsored
Medicare MedAdvance, I enrolled online. Although I received a letter
from the plan shortly after, I did not receive my plan identification
card until midway through January 2006. No attempt was made to
prioritize the applications of dual eligibles such as myself, even
though the benefit started for me on January 1st, 2006, as my Medicaid
drug coverage ended on December 31, 2005. In contrast, non-dual
eligibles did not need to start using Part D on January 1st. It took a
phone call to MedAdvance--during which I was placed on hold for forty-
five minutes, though federal requirements state phone calls must be
answered within a reasonable time period--to confirm that CMS had not
yet finished processing my application! Fortunately, the representative
eliminated a major worry by informing me that I could use the letter
from the plan as proof of (pending) membership. I should not have had
to go to such lengths to confirm the letter's validity just to ensure
that I could obtain my medications even without my identification card.
In addition, I am frustrated about the lack of attention given by
MedAdvance to maintaining its website. A newsgroup e-mail alerted me to
a change in coverage regarding two prescription forms of niacin.
Originally deemed ineligible for coverage because they are vitamins,
CMS has changed its mind because these medications can be covered at
the plan's discretion because they are used to treat high cholesterol.
I should like to discuss taking one of these medications with my
doctor, but I wanted to determine whether or not the plan covers them.
The section of the MedAdvance website detailing formulary changes has
not been updated since March 2006, while permission for coverage of the
drugs was granted by CMS in April 2006. In terms of efficiency,
especially considering the wait time during phone calls to MedAdvance,
obtaining the information via website is usually easier than making a
phone call. However, the website information is not current.
Additionally, I am having some difficulty trusting the plan
representatives to provide current and accurate information, given my
experiences with various personnel while I was choosing a plan in which
to enroll.
Based on my own experiences, I have determined that Medicare Part D
is not a boon but a blight upon our country. Although I was able to
research and choose a plan of my own, I experienced a great amount of
difficulty while doing so, and have had further problems with the
prescription drug benefit. I would like to point out that many
individuals were not and are not able to research and choose plans
themselves, nor to navigate the maze after enrollment. Many seniors are
uninformed or lack my computer skills; dual-eligibles may often have
impairments too severe to enable them to effectively advocate for
themselves in this particular situation.
If the level of civilization within a society is gauged according
to the treatment given its vulnerable populations--both the disabled
and the elderly may be considered as such--then Part D is a mark
against the United States Government and against the insurance and
pharmaceutical companies of America. In the future, more attention must
be paid to the individual needs of beneficiaries. Efforts should be
made by both the government and the insurance and drug companies to
improve communications within and between companies and the government,
and with beneficiaries. The government ought to cease to dictate terms
to the disabled and the elderly through regulations purporting to be in
our best interests, therefore robbing us of the independence to which
we are entitled.
Thank you for your time and attention.
Yours truly,
Jessica Miller
Muncie, Indiana 47304
April 27, 2006
Medicare part D's 1 percent penalty per month for late enrollment
is of great concern to me. I already know and my pharmacist has
confirmed; I will be throwing my money away paying premiums now to
protect me in the future from the 1 percent penalty. I am not eligible
for the Social Security extra help because of assets exceeding $11,500.
Also, I am not eligible for the Medicare Hoosier RX program solely
because I am under 65. More than likely there are others out there who
are in the same position I am in. It is my hope that the House Ways and
Means Committee will be able to do something to permanently eliminate
this 1 percent penalty.
Sincerely,
Linda A. Muckway, B.S.W.
Statement of Andrew Sperling, National Alliance on Mental Illness,
Arlington, Virginia
Chairwoman Johnson, Representative Stark and Members of the
Subcommittee, the National Alliance on Mental Illness (NAMI) thanks you
for holding this important and timely hearing. As the largest national
organization representing individuals with severe mental illnesses and
their families, we place a high priority in full and effective
implementation of the new Medicare drug benefit.
As you know, NAMI supported the Medicare Modernization Act (MMA)
when it passed Congress in 2003. Through our 1,200 affiliates, we have
worked hard to make sure that the program is smoothly implemented--
especially for the low-
income Medicare beneficiaries living with chronic illnesses--the
population most in need of strong and stable prescription coverage.
Overall CMS Performance and Assistance to Vulnerable Beneficiaries
The MMA represents the most far reaching changes to the Medicare
program since its inception in 1965. The Part D program alone has
involved enrollment of nearly 30 million people into new coverage over
a very short period of time. Without question, any effort to initiate
new coverage of benefits and shift such an enormous volume of
beneficiaries into new coverage (especially the 6.2 million dual
eligible beneficiaries) will result in disruption in coverage and
administrative problems.
From NAMI's perspective, even a single vulnerable beneficiary
experiencing problems in enrollment or initial transition is a problem.
At the same time, it is important to recognize the tremendous progress
that has been made since January and February. The problems that were
experienced by beneficiaries early in 2006--long waiting times at 1-
800-MEDICARE, inability to accurately confirm plan enrollment at the
pharmacy counter, frustration with transition refills, lack of
compliance by drug plans with formulary coverage requirements, etc.--
have improved significantly in recent months. NAMI would like to
commend the hard work of senior management and the staff at CMS in
effectively addressing many of these problems. The staff at CMS has
been extremely accessible and responsive to NAMI and many other groups
representing beneficiaries and their family members.
NAMI is concerned that the Government Accountability Office (GAO)
study released earlier this week on education and outreach efforts at
CMS fails to capture the improvements that have been made since January
and February. For example, we understand that wait times at 1-800-
MEDICARE have shrunk significantly since the time period measured in
the GAO study.
Further, the GAO study appears to be overly inclusive in
classifying information provided by CMS staff as inaccurate or
incomplete. In fact, information provided by CMS is designed to be
specific to the individual beneficiary (or their family member) that
have called in--not general information about the program. CMS should
be judged on how it meets the needs of actual beneficiaries with their
specific needs and the GAO report appears to have missed this key
performance measure.
Medicare Part D has been in effect for barely 120 days. While it is
important for the GAO to continue to provide oversight and investigate
the performance of CMS the private sector plans that offer drug
coverage, it should be recognized that this report is only a snapshot
taken in the earliest days of the program. By contrast, Part D will be
with the Medicare program for many years to come. NAMI--like all other
groups representing beneficiaries--are in this for the long haul.
Transition of Dual Eligibles to Part D
NAMI continues to be concerned about the performance of Part D drug
plans in meeting their responsibilities with respect to ``continuity of
care'' for dual eligibles with severe mental illness and other
disabilities and chronic illnesses. By ``continuity of care'' NAMI is
referring to the critical issue of ensuring that dual eligibles with
severe mental illness do not have their ongoing care interrupted. The
consequences of interrupted access to medications for duals with mental
illness can be severe. Treatment for diseases such as schizophrenia,
bipolar disorder and major depression is complicated and typically
involves the prescribing of multiple medications and significant co-
morbidities. Lack of coverage to any medication, even for a short
period of time, can have disastrous results. Further, most of the
medications commonly prescribed to treat these disorders (including
anti-psychotics, anti-convulsants and anti-depressants) are NOT
clinically interchangeable.
CMS Formulary and Transition Guidance--Critical Protections for Dual
Eligibles
NAMI has therefore been especially concerned that protections be in
place on an ongoing basis to ensure that all Medicare beneficiaries
with mental illness--especially dual eligibles--are able to make a
smooth transition to Part D and maintain access to the specific
medications prescribed to them over the long-term. In response to both
of these concerns, CMS has issued guidance to all Part D plans. These
include:
Transition Guidance--This guidance requires Part D plans to
continue covering all medications prescribed to a beneficiary in any
initial transition period. CMS has now extended this guidance for the
2007 contract year. NAMI applauds CMS for keeping this key protection
in place. This will be especially important for dual eligibles who must
go through random assignment to a Part D plan again in 2007.
Formulary Guidance--This requires all Part D plans to cover ``all
or substantially all'' of the medications commonly prescribed to treat
mental illness including anti-psychotics, anti-depressants and anti-
convulsants. NAMI is extremely pleased that CMS has renewed this
guidance for 2007. This requirement for broad formulary coverage is
essential to making the benefit work for beneficiaries with severe
mental illnesses.
NAMI is extremely grateful to CMS for renewing both of these
guidance requirements for all PDPs and MA plans for 2007. Continuation
of these protections will ensure that prescription drug coverage is
effective and uninterrupted for those who need it most--Medicare
beneficiaries living with chronic illnesses with complicated treatment
needs and high drug costs.
Beyond the critical protections in the CMS formulary and transition
guidances, NAMI is extremely concerned that some drug plans are
increasingly using ``safety edits'' as ``cost edits.'' These safety
edits are typically used as quantity or dosage limitations, and in some
cases, to outright deny coverage. NAMI respects that drug plans need to
ensure that a medication prescribed for an enrollee is clinically
appropriate. At the same time, these safety edits should never be
applied against a dosage or quantity of a medication (especially for an
antipsychotic medication prescribed to treat schizophrenia) for which a
beneficiary has previously achieved clinical stability.
Providing Additional Guidance to Allow Manufacturer Sponsored
Assistance Programs to Supplement Part D
Mr. Chairman, as you know there has been a great deal of confusion
around the current status of pharmacy assistance programs (PAPs)
offered by drug manufacturers for low-income Medicare beneficiaries. In
response Part D, some of these programs have either shut down,
suspended enrollment, or plan to cease operations at the end of the
Part D open enrollment period (May 15, 2006). This is situation is
further complicated by confusing guidance that was put forward by the
HHS Office of Inspector General (IG) in November 2005. This guidance
calls into question whether PAPs can legally supplement coverage under
Part D for low-income beneficiaries who do not qualify for the Part D
low-income subsidy (LIS). CMS claims that these programs can offer
assistance outside of Part D, yet the IG's guidance creates enormous
legal and administrative barriers to the development of creative
approaches that would clear the complex legal standards set forth by
the IG.
This is an especially important issue in NAMI's view since there
are likely millions of low-income Medicare beneficiaries who are close
to (and in some cases below) the 150% of poverty upper limit for LIS
eligibility who are now worse off under Part D. This is occurring
because they are failing the asset test for LIS eligibility and
simultaneously losing access to a manufacturer-sponsored PAP that
offered them coverage for their medications at little or no cost prior
to Part D.
In NAMI's view, the complex legal and administrative issues
preventing this problem from being resolved must be overcome. While we
respect the IG's independence, NAMI would encourage this Subcommittee
to make every effort to persuade all sides involved--especially the
IG--to resolve this matter as quickly as possible. This is especially
urgent with the end of the open enrollment period looming just a little
more than 10 weeks away. There is absolutely no reason why legal and
administrative roadblocks cannot be removed so that PAPs and charitable
organizations can make assistance available to low-income
beneficiaries. This should include assistance for:
1. Dual eligibles living on SSI facing a serious financial
burden even with cost sharing as low as $1 for a generic and $3
for a brand name (many dual eligibles living in group homes or
assisted living facilities have disposable income as low as $15
to $20 per week),
2. Low-income beneficiaries who failed to qualify for LIS
solely because of assets above the limit who cannot afford
monthly premiums and annual deductibles, and
3. Individuals below 200% of poverty who end up in the
doughnut hole coverage gap.
In each of these cases, NAMI agrees with CMS that assistance should
be linked to enrollment in a Part D plan. It is critically important
that any assistance from a PAP or charitable organization not serve as
an inducement to not sign up for coverage--and assessment of a late
enrollment penalty in future years.
In recent weeks, a few manufacturers have received blessing from
the IG to initiate PAPs that will operate independent of Part D by
offering free medications to qualified individuals that have signed up
for Part D coverage. This is an encouraging step forward. However, NAMI
would nonetheless encourage this Subcommittee to continue to press CMS
to issues such as cost sharing for dual eligibles and assistance with
premiums and deductibles for beneficiaries below 150% who failed to
qualify for LIS because of the restrictive asset test. Accessing free
or deeply discounted medications would obviously be helpful for them,
but not a substitute for the assistance they need to fully participate
in Part D coverage.
Repeal of ``Non-Interference'' and Restricting Beneficiary Choice
There has been a great deal of discussion in Congress about repeal
of the so-called ``non-interference'' provision in the MMA that limits
the authority of the HHS Secretary to engage in direct negotiations
with drug makers over cost and access. NAMI is concerned that changing
this critical piece of the Medicare Part D benefit and allowing the
Secretary to negotiate a single national structure for access to
medications could be extremely disruptive for beneficiaries. In short,
NAMI is concerned that repeal of the ``non-interference'' provision
will inevitably lead toward these PDPs and MA plans having to follow a
single national structure for access and coverage.
Further, it is NAMI understands that both the CMS Office of Actuary
and the Congressional Budget Office (CBO) have concluded that repeal of
the ``non-interference'' provision would not result in any additional
savings beyond the discounts from manufacturers that the multiple
private sector plans have already been able to achieve through the
competitive process that CMS has put in place. Our experience with the
VA, state Medicaid agencies and other public sector payors makes clear
that a single governmental authority negotiating for a single price and
formulary structure deals to restrictive formularies that in the end
hurt the most vulnerable beneficiaries.
Congress Needs to Address Cost Sharing for Duals and Benzodiazepine
Coverage
Mr. Chairman, as you know a broad range of legislation has been
introduced in the House this year to address concerns with the new
Medicare drug benefit. They range from proposals to completely suspend
the benefit to replacing the new program with a government managed
program. NAMI believes that in many cases action on legislation to
completely overhaul the new benefit is premature at this point. As you
know, the President has made clear that he is firmly opposed to any
major structural reforms, much less the scrapping of the entire
benefit.
At the same time, NAMI believes that there are several bipartisan
bills that make minor adjustments to Part D that would resolve specific
narrow problems with the new benefit, while still allowing CMS to
proceed with the new program. Two specific bipartisan proposals that
NAMI would recommend this Subcommittee give serious consideration to
are proposals that would address cost sharing for certain dual
eligibles and the mandatory exclusion of benzodiazepines.
Duals Cost Sharing (S 2234)--The proposal, introduced
by Senators Gordon Smith (R-OR) and Jeff Bingaman (D-NM), would
require Medicare drug plans to waive cost sharing for dual
eligibles in certain community-based residential programs such
as licensed group homes and other residential treatment
settings (just as the law currently requires for dual eligibles
in nursing homes and psychiatric hospitals).
Benzodiazepine Coverage (HR 3151)--The proposal,
introduced by Representatives Ben Cardin (D-MD) and Jim Ramstad
(R-MN), would repeal the current requirement for Medicare drug
plans to exclude coverage of medications known as
benzodiazepines (klonopin, ativan, xanax, etc.) and allow drug
plans to cover them at their discretion. It should be noted
that the vast majority of states are covering these medications
for dual eligibles as allowed by CMS.
NAMI strongly supports both of these proposals and would recommend
them as part of any technical or incremental changes that may be moving
forward later this year.
Conclusion
Thank you for convening this important hearing. We share your
commitment to making sure that the Medicare drug benefit reaches its
full potential to assist seniors and people with disabilities who need
coverage for critical prescriptions.
Statement of the National Association of Health Underwriters,
Arlington, Virginia
Relative to Experience with Medicare Part D
(Arlington, VA)--The National Association of Health Underwriters
(NAHU) is very puzzled with the GAO report issued this week on Medicare
Part D implementation. ``The 20,000 members of NAHU are involved on a
daily basis enrolling seniors in Part D all across America. Our
experience has been very positive, and the service our members report
receiving from Medicare.gov and 1-800-Medicare is excellent,'' said
Janet Trautwein, Executive Vice President and CEO.
``Our members have told us that the people they counsel have been
greatly helped by this new benefit, and that they were enrolled with
relative ease. Here is just a sampling of some of their responses:
``Being a senior myself and previously without Rx coverage,
this is a wonderful thing that all seniors should be elated and
telling the world about--it's the greatest.'' Marina del Rey,
CA
``The actual enrollment did not take much time and went very
smoothly. In fact, I did it later in the day on December 31st--
I didn't want to rush into it! Even thought it was so very
late, I did not experience difficulties with the enrollment.
The Medicare website has continued to evolve. I find it more
helpful each time I check into it.'' Omaha, NE
``I have enrolled MANY people in Medicare D. Honestly, it is
not difficult at all. In the state of North Carolina, we have
16 companies selling Medicare Part D. I studied many of them
and picked the companies I felt had good formularies, value for
their price, and could help ANYONE from those who are on no
medication to people who take numerous medications daily.''
Kernersville, NC
``My father, who is 79 years old and just short of 80, went
through the process with his retirement trust and it was a
breeze for him. He actually started cancer treatment yesterday
and needed prescriptions, for which all he used was the letter
from Medicare and the pharmacy took the letter with no problem.
All went very well.'' Tualatin, OR
``I was amazed at just how well the Medicare.gov website
worked! There just isn't any better way to assure you are
picking the right plan for the right reasons. Needless to say,
I have a great deal of credibility on the line with my clients
if the site isn't accurate.'' Corinth, MS
``I speak to people every day who are calling to thank me for
saving them money on their scripts. As for the Medicare
Advantage plans, those enrollees are saving significant amounts
of money. I am seeing a minimum of $1400/year saved. I see in
our future a lot of seniors with more disposable income. To
quote Martha, `that's a good thing.' '' Lincoln, NE
``. . . my parents and uncle live in Wyoming. I enrolled them
online on December 31. By Saturday, January 7, they had all
received their cards and the following Tuesday, January 10,
filled some of their prescriptions at the local pharmacy and
all went very smoothly. Because of the plan we entered them in,
the drugs they received did not cost them anything. They were
very surprised and `shocked' as to how easy things went for
them.'' Larkspur, CO
``I am only on one medication, but I enrolled in a Part D
plan as a precaution. It is just like having insurance on my
car and my jewelry--I have to have it for myself.'' Deerfield,
IL
``The daughter of a Medicare beneficiary reports that she
consulted with her broker, who helped enroll her mother in the
Blue MedicareRx Value Plan. This process went very smoothly and
took little time. On January 2, her mother needed to fill a
prescription, and the process was very simple as well. Although
they did not yet have an acknowledgement letter, the pharmacist
verified their information and her mother received her
prescription. Her acknowledgement letter arrived shortly
afterward. They are very pleased with the savings provided by
Medicare Part D--all four current medications are covered and
without prescription drug coverage she would pay $162 for one
of the medications alone.'' Schaumburg, IL
``Our clients loved it.'' Orlando, FL
``I have assisted several seniors with this process. I did
not find it confusing. The most time-consuming part was
determining which vendor offered the coverage best suited to
the individual's needs.'' Maumee, OH
``My grandmother is on a Secure Horizon Medicare plan through
PacifiCare in Colorado. I have worked with employee benefits
for more than 15 years. When I called my grandmother knowing
that I would need to assist, she told me that PacifiCare sent
her a letter advising her that she is automatically enrolled
and it was already taken care of. Of course I could not believe
that it would be so simple. After creating much more work than
necessary with several phone calls and finally a conference
call, it was true. It was automatically handled. I was amazed
and grateful at the same time.'' Denver, CO
``Any time a new benefit begins where many people are eligible,
whether a government program or a private sector offering, there will
be initial snags,'' added Trautwein. ``What is amazing is how quickly
issues have been addressed, and the high level of enrollment we have
already seen in Part D. Our members look forward to continuing our work
with beneficiaries on an ongoing basis to be sure they are aware of the
wonderful new opportunities in Medicare. Unfortunately, inaccurate
reports alleging difficulty in signing up for Part D may discourage
people from taking the first step towards protecting their health with
coverage for prescription drugs. We hope that in the future more care
will be taken before such inaccuracies are reported as fact. The fact
is that problem areas were identified early on and were taken care of.
The fact is that 30 million people have enrolled in Part D and more are
enrolling every day. The GAO report does not apply to the current
situation and to characterize it as such is inaccurate and
irresponsible.''
The National Association of Health Underwriters represents over
20,000 health insurance agents, brokers, consultants and professionals.
Our members serve employers and individual consumers in accessing and
purchasing affordable health insurance and related products. For more
information, please contact Brandi Travis, manager of communications.
Statement of the National Home Infusion Association, Alexandria,
Virginia
Chairman Johnson and Members of the Subcommittee, the National Home
Infusion Association (``NHIA'') is pleased to present this written
statement for the record in connection with the Subcommittee's May 3,
2006 hearing on implementation of the Medicare outpatient prescription
drug benefit.
NHIA is a trade association that represents and advances the
interests of organizations and individuals that provide infusion and
specialized pharmacy products and services to the entire spectrum of
home-based patients.
As reflected in the testimony presented at the hearing, the new
Part D drug benefit already has been providing access to prescription
drugs to seniors who had limited or no coverage prior to enrollment in
Part D. Notwithstanding some initial implementation problems, as a
retail drug benefit, Part D seems to be working fairly well.
One group of beneficiaries who are not being adequately served by
Part D, however, is those in need of home infusion therapy. The problem
stems from the fact that the Centers for Medicare and Medicaid Services
(``CMS'') has interpreted and implemented the Part D benefit largely as
a retail drug benefit. Unfortunately, the structure that can work well
for dispensing pills and other prescriptions at the retail pharmacy
level is not feasible for more complex intravenous therapies that
require more extensive clinical services, care coordination, equipment,
and supplies for proper administration. This is particularly true with
respect to home infusion therapy, which private sector health plans
typically cover as a comprehensive medical benefit rather than a
pharmacy benefit.
What is Home Infusion Therapy?
Home infusion therapy involves administering medications into the
patient's bloodstream. It is prescribed when the patient's condition is
so severe that it cannot be treated effectively by oral medications.
Infusion drugs must be:
Compounded in a sterile environment;
Maintained in appropriate conditions to ensure
sterility and stability;
Administered at exactly the right dose and on the
right schedule;
Administered using the appropriate vascular access
device (often a long-term device) which is placed in the
correct anatomical location based on the expected duration of
therapy, the pH, osmolarity, and osmolality of the medication;
Administered using an appropriate drug delivery
device;
Flushed with the proper flushing solution between
doses; and
Monitored for adverse reactions and therapeutic
efficacy.
The range of variables that must be managed by the infusion
pharmacy to ensure safe and appropriate administration has led
commercial payers to treat home infusion therapy as a medical service,
reimbursed under their medical benefit (rather than the prescription
drug benefit) and paid for using a per diem for clinical services,
supplies, and equipment and a payment for nursing visits. It also has
led most commercial payers to require that infusion pharmacies be
accredited by nationally recognized accreditation organizations.
Commercial payers have used this model aggressively to reduce overall
health care costs while achieving high levels of patient satisfaction.
Home Infusion Pharmacy Services Differ from Retail Pharmacy Services
To ensure safe and proper administration of infusion drugs as
outlined above, home infusion pharmacies provide the following
services:
Comprehensive assessment that considers patient
history, current physical and mental status, lab reports,
cognitive and psychosocial status, family/care partner support,
prescribed treatment, concurrent oral prescriptions, and over-
the-counter medications;
Maintenance of appropriate procedures for the
compounding and distribution of sterile infusion products as
outlined in the national standards and state and federal
regulations;
Drug interaction monitoring and identification of
potential drug, dose or drug-catheter incompatibilities;
Comprehensive admission procedures that include
patient education of medical and disposable equipment use,
medication storage and handling, emergency procedures, vascular
access device management, recognition and reporting of adverse
drug reactions;
Comprehensive care planning that considers actual or
potential drug or equipment-related problems, therapy
monitoring with specific patient goals, and coordination of
activities with other providers such as home health agencies
and physicians;
Ongoing patient monitoring and reassessment
activities to continually assess for response to treatment,
drug complications, adverse reactions, and patient compliance;
Laboratory report reviews, as applicable, and
subsequent consults with care professionals to adjust
medication orders if necessary;
Maintenance of appropriate physical facilities for
storage, preparation, dispensing, and quality control of all
infusion medications and equipment;
Ongoing employee education and competence validation
activities; and
Performance improvement programs that include
collection of clinical outcomes data, patient perception data,
trending and analysis of these and other performance
measurement data, and root cause evaluations of all sentinel
events.
Most retail pharmacies are not designed or equipped to provide all
of the above services.
Home Infusion Therapy is not a Good Fit under Part D
CMS's final Part D rule limits coverage of infusion therapy to the
cost of the drugs alone and a retail-like dispensing fee. The
regulation expressly disallows coverage for the professional services,
supplies, or equipment necessary to safely provide home infusion
therapy that typically represent more than half the cost of caring for
these patients. This fundamental coverage shortfall, as well as the
general inapplicability of the retail benefit design to home infusion
therapies, has adversely affected the care of Medicare beneficiaries in
several ways.
Dual-eligible beneficiaries typically had full coverage of home
infusion therapy under Medicaid prior to their enrollment in Part D.
Once enrolled in Part D, however, many dual-eligible beneficiaries
initially experienced a disruption in care due to the states'
uncertainty as to their role in providing Medicaid ``wrap-around''
coverage to fill in the gaps left by the drug-only coverage offered by
Part D. CMS has been working to clarify the states' role and resolve
these issues, which has helped to minimize disruptions in care.
However, dual-eligibles continue to be adversely affected by restricted
formularies, cumbersome prior authorization processes, inadequate
coordination of care, and a lack of access to qualified providers in
Part D home infusion networks. These issues have led to unnecessary
hospital admissions and hospital discharge delays that continue to this
day.
It has been our experience that Part D enrollees who have no
Medicaid or supplemental insurance have little or no access to home
infusion therapies or qualified home infusion therapy pharmacies
through Medicare Part D. Since the non-covered home infusion supplies,
equipment, and professional services constitute over 60 percent of the
costs associated with home infusion therapy, these Medicare
beneficiaries are effectively denied access to home infusion. They are
being forced to seek treatment in hospitals and skilled nursing
facilities at a significantly higher cost to Medicare and at much
greater inconvenience to the patients.
In addition, Part D coverage limitations pose a very real threat to
health and safety. There are reports that non-infusion pharmacies have
sent non-compounded intravenous drugs by mail to beneficiaries, without
educating the patients on how to mix and administer the drug, without
any clinical oversight that should be provided based on community
standards of care, and without the necessary supplies and equipment
that are integral to the drug's safe and proper administration. CMS has
been quick to recognize the serious safety concerns and is taking steps
to minimize or eliminate these occurrences. While these efforts have
helped to address the worst abuses observed during the early weeks of
Part D, the root causes of poor quality of care remain intact: a
fundamental coverage shortfall, a lack of appropriate quality
standards, and an alignment of incentives that do not foster quality
patient care.
Since the Part D benefit went into effect on January 1 of this
year, the following issues have arisen and remain with respect to the
coverage and provision of home infusion therapy under this benefit:
The absence of coverage for the professional
services, supplies and equipment has discouraged the
participation of qualified home infusion pharmacies in Part D.
A disturbing number of PDPs have omitted home
infusion drugs from their formularies and have not implemented
a timely exceptions process that permits infusion patients who
have acute needs to access these drugs.
Other PDPs are genuinely concerned and frustrated
about Part D's incomplete coverage for home infusion therapy
and are waiting for CMS or Congress to correct this situation.
Part D does not provide quality standards applicable
to home infusion therapy. Consequently, Medicare beneficiaries
are at risk of receiving infusion drugs from entities that do
not meet well-established standards of care.
Many Medicare Advantage enrollees who had
comprehensive home infusion therapy coverage under a Medicare +
Choice (Medicare Advantage) program prior to January 1 have
actually lost this coverage and are now exposed to the same
quality and coverage shortfalls as described above.
Proposed Solution:
CMS believes that it does not have the authority to cover infusion
therapy services, supplies, and equipment. Yet, CMS acknowledges openly
that its policies leave ``gaps in coverage'' for home infusion. These
gaps are jeopardizing patient safety and are actually adding costs to
the Medicare program to the extent that patients are forced into more
expensive treatment settings or are receiving inappropriate care. As
long as Congress allows incomplete coverage of and access to home
infusion therapy in Medicare, the program will not realize the
efficiencies, cost-savings, and quality improvements employed in the
private sector, where home infusion has been utilized and fully covered
for decades.
We believe strongly that home infusion therapy coverage should be
consolidated under Part B as a separate medical benefit. This can be
accomplished through legislation that provides permanent, complete
coverage for home infusion therapy under Part B or authorizes a
demonstration project to provide such coverage.
Why Part B? Some home infusion drugs already are covered under Part
B. Part B was designed to cover multi-faceted therapies and procedures.
It is the most logical part of the Medicare program in which to
consolidate coverage for home infusion therapy because it could
accommodate the various aspects of the therapy--the services, supplies,
equipment and drugs. Thus, infusion therapy could be defined and
covered accurately under Part B. By contrast, even if Congress were to
amend Part D to require full coverage for home infusion, it would
remain an awkward fit since the entire Part D administrative apparatus
is designed for a drug-only benefit and is not one that can easily be
adjusted to accommodate what CMS acknowledges to be a complex medical
benefit.
Every day that passes without complete Medicare coverage of home
infusion therapy is a missed opportunity to bring cost-effective care
in the most convenient setting to beneficiaries. Medicare beneficiaries
have a legitimate expectation that they now can obtain home infusion
therapy through the Medicare program. We stand ready to work with
Congress to fulfill this expectation for our seniors. Thank you for
your interest in overseeing and improving the implementation of this
important benefit.
National Kidney Foundation, Inc., New York, New York
The National Kidney Foundation (NKF) is the nation's oldest and
largest voluntary health agency serving the needs of kidney patients
and the health care professionals who care for them. The National
Kidney Foundation's clinical practice guideline development program,
known as the Kidney Disease Outcomes Quality Initiative, or KDOQI, has
facilitated enhanced care for Medicare beneficiaries with chronic
kidney disease (CKD). The Medicare Prescription Drug Program should
enable Medicare beneficiaries to realize KDOQI recommendations if drug
plans provide access to medically necessary treatments for chronic
kidney disease.
Chronic Kidney Disease (CKD) affects 20 million people in the U.S.,
with another 20 million Americans at potentially increased risk.\1\
Between 1992 and 2002, the percentage of Medicare beneficiaries with a
diagnosis of CKD, including, but not limited to, those who receive
benefits under the Medicare End-Stage Renal Disease (ESRD) Program,
increased from 3.1% to 6.8%. In 2003, Medicare patients with CKD
consumed 23.6% of the Medicare budget.\2\ Moreover, the number of
Americans with kidney failure (ESRD) who are treated either with
dialysis or transplantation, and, therefore, become entitled to
Medicare without regard to age, is expected to increase 85% between
2000 and 2015.\3\ Oral medications can prevent or slow the progression
of CKD to kidney failure, as well as limit the consequences of the
complications of CKD (anemia, bone disease, heart disease) for those
covered by Medicare who do not yet require dialysis or a kidney
transplant to survive. They can also reduce morbidity and mortality
experienced by Medicare beneficiaries with ESRD. Therefore, it is
important that Medicare prescription drug plans provide affordable
access to the spectrum of medications needed by beneficiaries with CKD,
so that this Medicare population is not discouraged from enrollment or
inclined to disenroll in Part D plans.
---------------------------------------------------------------------------
\1\ K/DOQI Clinical Practice Guidelines for Chronic Kidney Disease:
Evaluation, Classification and Stratification. Am J Kidney Dis 39:S1-
S000, 2002 (suppl 1).
\2\ United States Renal Disease System 2005 Annual Data Report.
\3\ D. T. Gilbertson, et al., Projecting the Number of Patients
with End-Stage Renal Disease in the United States to the Year 2015. J
Am Soc Nephrol 16: 3736-3741, 2005.
---------------------------------------------------------------------------
The implementation of the Medicare Prescription Drug Program has
raised a number of concerns in the kidney community.
Enrollment
One plan has mailed misleading letters to people with ESRD stating
they are not eligible to enroll in a stand-alone drug plan because they
have ESRD. Although the communication was the result of a programming
change in the letter template, patients may assume the letter is
correct and discard their enrollment packet and ID card. CMS should
approve or reject templates of letters before they can be mailed to
applicants and members.
Some people who applied online and have confirmation of enrollment
have waited months to learn if applications were approved. Some have
been told that computer glitches held up enrollments. Without any Part
D ID, these patients have been unable to use Part D to get prescribed
drugs. CMS states that plans must approve applications made in one
month by the first of the next month. CMS should require plans to track
the time it takes them to approve applications made through the
Medicare website. This would allow outlier plans to be identified and
procedures developed to help them process applications in a timely
manner so patients would be able to use Part D when promised.
Some who applied for plans in 2005 received plan IDs and enrollment
materials and were using those plans. However, because of facilitated
enrollment, they were placed in different plans in April. There should
be a better way to cross-check plan enrollment and utilization to avoid
enrollments into two plans which could result in disenrollment from the
plan the patient prefers.
Some who enrolled in plans and were using them received notice that
their plan enrollment was terminated without explanation. No one at the
Medicare helpline or the plan could explain why. CMS should require
that every disenrollment notice include the reason for disenrollment
and appeal rights.
Some people with kidney disease who are dual eligible never
received notice of plan enrollment and were not auto-enrolled in plans.
Reportedly this related to communications problems between databases.
Even with a Medicare ID and active Medicaid cards, they were not
enrolled in Wellpoint, the fallback plan, because pharmacists did not
know about the fallback plan or did not trust they would be reimbursed.
Patients were shuttled back and forth between Medicare and Medicaid
without problem resolution. Many were charged full price for drugs that
should have been covered by Part D. CMS is working on database
communications. There should be alternate ways to communicate with
pharmacists since all were not aware of the safety net procedures in
place.
Premium Payment
Some people requested that premiums be deducted from Social
Security checks. Some who applied in January had never had premiums
deducted by May. Many worry that their coverage will be terminated for
nonpayment. It would help if people could be notified that their
request for deduction of premiums had been received. Also, CMS provided
information indicating that only a maximum of three month's premiums
would be deducted and that plans could bill if outstanding premiums
covered a longer period of time. There should be some assurance that
duplicate payments will not result.
Part B vs. Part D issues
Pharmacists continue to have difficulty knowing whom to bill for
immunosuppressants needed to prevent rejection of transplanted organs
and when to bill Part D or whether they should bill Part B. Doctors
should be encouraged to write Part B or Part D on prescriptions to help
pharmacists. If a drug is covered by Part D, the pharmacy should bill
Part D. However, if the drug is covered by Part B and the pharmacy does
not have a Medicare provider number to bill Part B, CMS should require
the pharmacy to tell the patient to consult with his/her transplant
program about where he/she can get drugs under Part B rather than
trying to bill Part D. Problems with Part B vs. D have placed patients
at risk of losing transplants due to delays in getting essential
immunosuppressants.
Drug Utilization Limits
Prior authorization requirements have been imposed on Medicare
beneficiaries who have received solid organ transplants and are
entitled to Part D coverage for immunosuppressant medications. This has
occurred despite the promise of access to all or substantially all of
these immunosuppressant drugs under Part D. Prior authorization has
placed a paperwork burden on busy physicians and created delays in
patient access to essential medications. Plans should have to abide by
the requirement that those who have been treated with these medications
under Medicaid drug programs or with other third-party payment should
not be subject to prior authorization requirements.
Excluded Drugs
The statutory exclusion of prescription vitamins and mineral
products, except prenatal vitamins and fluoride preparations, has
proved problematic. Oral iron is needed by patients with CKD, other
than in-center dialysis patients, to treat the anemia that accompanies
chronic kidney disease. (In-center dialysis patients receive iron
supplements intravenously.) Dialysis patients need special vitamins
because dietary restrictions limit their intake of essential vitamins
and minerals, the dialysis procedure removes essential vitamins and
minerals, and because most standard vitamins contain high levels of fat
soluble vitamins and certain minerals that rise to toxic levels in
people with impaired kidney function.
Formularies
Not all plans provide coverage for the spectrum of medications that
are effective in addressing problems of bone and mineral metabolism
experienced by Medicare beneficiaries with CKD. Disturbances in mineral
and bone metabolism are common in patients with CKD. These patients
have bone pain, increased incidence of bone fractures and deformity,
myopathy and muscle pain and ruptures of tendons. Elevated blood levels
of PTH exert significant adverse effects on the function of almost
every organ and may require parathyroidectomy. Furthermore, there is
growing concern about the long term effects of these derangements on
soft tissue calcification. All of these conditions can be managed with
appropriate pharmacological interventions but clinicians must have
access to as wide an array of medications as possible to individualize
therapy for these multiple conditions and avoid harmful drug
interactions.
CMS Formulary Guidance
CMS has published guidelines that the agency will use in reviewing
prescription drug plan formularies and procedures and thus, fulfill the
requirement of the Medicare Modernization Act to assure that drug plans
do not discriminate against any particular types of beneficiaries.
However, CMS needs to operationally define when enrollment is
considered to be ``substantially discouraged'' as well as develop a
program to identify and compare actual Part D enrollment by
beneficiaries with CKD as opposed to expected enrollment. Furthermore,
CMS should track formulary changes, including drug utilization limits
affecting beneficiaries with CKD during the course of the benefit year,
as well as the number of beneficiaries with CKD who drop out of the
program.
The following comments concern the draft formulary guidance that
CMS published in March, 2006.
P & T Committee Review
Because of the size of the Medicare population with CKD, and the
extent of Medicare program expenditures associated with this condition,
there should be a requirement that P & T committees include members
with expertise regarding the pharmacological needs of kidney patients.
Drug List Review
Problems of access to the drugs that prevent
transplant rejection were noted above. Unfortunately, the CMS
formulary guidelines for 2007, as drafted, will not resolve
these problems. While the relevant section on page 7 of these
draft guidelines, reads as follows: ``CMS will continue to
require Part D plan formularies to include all or substantially
all (immunosuppressants),'' on page 4 it is stated that, if a
USP formulary key drug type is primarily covered under Part B,
CMS will not expect these drugs to be represented on
formularies. (Immunosuppressants are primarily covered under
Medicare Part B.) Finally, on page 3, it is stated that plans
that use a classification system that is consistent with USP's
will have a safe harbor. Regrettably, USP has deleted
immunosuppressant drugs for transplant recipients from its
model formulary for 2007. Unless these inconsistencies are
addressed, transplant recipients enrolled in Part D will
continue to experience problems in accessing the drugs they
need to protect their transplants and avoid the need for re-
transplant. Immunosuppressants, and other drugs that are
primarily covered under Part B, must be included in Part D
formularies in order to minimize confusion and insure that
patients will not be placed in a life-threatening situation
when their prescriptions cannot be filled.
CMS should utilize the analysis of the USP model
formulary that was developed by ESRD Network 8 in evaluating
whether plans are providing appropriate access to necessary
drugs for those with kidney disease and kidney failure,
including those with kidney transplants.
Formularies should contain separate pharmacologic
classes for fixed dose combinations of antihypertensive drugs
to promote adherence of patients to regimens that can prevent
or delay the progression of chronic kidney disease and/or its
complications.
Prior Authorization, Step Therapy, and Quantity Limits
Plans should be reminded that once a request for coverage
determination is approved, it covers the plan year, as long as the
doctor prescribes the drug, the patient takes the drug, and the patient
is still on that plan. Some plans are requiring doctors to provide
prior authorization multiple times per year.
Long Term Care Accessibility
With regard to accessibility for Medicare beneficiaries in long
term care facilities, many of these patients require unit dose
packaging and CMS should require PDPs/MA-PDs to make this service
available.
Conclusion
Thank you for the opportunity to provide these comments on the
implementation of the Medicare prescription drug program. The National
Kidney Foundation is available to assist the Centers for Medicare and
Medicaid Services in developing strategies to assure that Medicare
beneficiaries with chronic kidney disease have access to high-quality,
cost-effective drug coverage.
Mill Creek, WA 98012
May 1, 2006
Dear Committee Decision Makers:
I wish to state my total opposition to the implementation of this
egregious legislation that does not guarantee ``best drug pricing''
negotiations, customer flexibility or reasonable customer choice and
which seems meritorious only to the pharmaceutical and insurance
companies! This legislation was also improperly and possibly even
illegally brought to fruition in a manner that in itself warrants
investigation and negation of this legislation! I urge reconsideration
of this benefit as a whole with new drug pricing negotiating
legislation included at a cost which is more in line with what was
presented & voted on (but inaccurate & woefully (possibly criminally)
misrepresented) at the time.
Sincerely,
Toniann Reading
Statement of Elena Rios, National Hispanic Medical Association
Congresswoman Johnson and the Members of the Subcommittee on
Health, Ways and Means Committee, it is an honor to provide testimony
to discuss the Medicare Part D program and its impact on the Hispanic
community.
I am representing the National Hispanic Medical Association, a non-
profit organization representing licensed Hispanic physicians in the
U.S. The NHMA mission is to improve the health of Hispanics and other
underserved. We believe that the Medicare Part D program represents a
major step forward in expanding Medicare and in improving quality of
life for American elderly and other eligible beneficiaries.
We are here today to discuss the continued concerns from NHMA that
need to be addressed to improve the implementation of Medicare Part D
in order to increase access to prescription drugs for Hispanic
beneficiaries.
Medicare represents 43 million Americans who need help in moving to
the new Part D Drug Plan by May 15, 2006--84 percent White, 7 percent
Black, 6 percent Hispanic, and 3 percent for all others. Among the
disabled, 11 percent are Hispanic. At this point, we also need help in
reducing the penalties for not enrolling by this deadline, which will
become a deterrent to many.
As we know from the Agency for Healthcare Research and Quality
Health Disparities Report, Hispanics have the worst record when it
comes to indicators for access to health care services, in general.
Thus, we can expect that our community requires extra attention in the
implementation of health programs in order to increase use by the
group.
What is key for Hispanics is first, they are a group with low rates
of enrollment in Medicare compared to Blacks and Whites. They have the
greatest proportion of lack of insurance in America and, thus, as a
group, have major challenges for the system to include them in any
health care service.
Some of the challenges that we must address for Hispanics include
low educational attainment and low literacy rates; less ability to
follow drug label instructions; the strong Spanish language use; the
importance of culture and health beliefs; the lack of trust of the
system and the lack of awareness of the public health programs and
healthcare services in general; the critical lack of Hispanic
physicians and healthcare providers; and the importance of Latino
community-based services for information.
In terms of access to needed medical care, enrollment in Medicare
and now Part D, is key for disabled Latinos and, especially, for the
elderly Latinos with multiple chronic diseases--diabetes, heart
failure, ESRD, cancer, glaucoma, Parkinson's disease, Alzheimer's
disease, etc.
Hispanics also represent the largest immigrant group in the U.S.
One in nine U.S. residents is foreign born, one in seven workers is
foreign born, as is one in four low-wage workers. The Urban Institute
recently released an eight year study on ``Assessing the New
Federalism: Eight Years Later'' and studied immigrants vs. non-
immigrants. It found that immigrant families participate at a
substantially lower level than their native counterparts in such
benefit programs as TANF, food stamps, and housing assistance. After
welfare reform, benefit use declined not only among legal immigrants
whose eligibility was restricted by the law but also among refugees,
citizen children, and other populations whose eligibility was not
restricted. Given the new interest from Congress in immigration reform,
there is a critical need to include health care education and
enrollment for immigrants into health care services.
The MMA Law has major challenges--a major one being the transition
of the 6.1 million Dual Eligibles, with a third being Hispanic and 62%
of those are under 150% of Federal poverty level, relying only on
Social Security. Despite planning for the past year of CMS and the
States, we now know about several glitches that have occurred with the
transition of Dual Eligibles to Medicare drug plans--some due to
technology and staff errors and some due to the inadequate customer
service and some due to the challenges of Hispanics and health care.
CMS reports that even after successful application, there are
problems identified in processing the applications--with only one in
four applications for Low Subsidy Benefit being successfully executed,
delaying the enrollment from our communities further.
Literature shows the impact of Medicare and Medicaid drug
prescriptions with minorities:
1. Medicaid Managed Care and Racial Disparities in AIDS
Treatment, Health Care Financing Review, 2004, showed Blacks
still face barriers in access to care, even after Medicaid
assured financial access--under both FFS and managed care.
2. Racial and Ethnic Disparities in Prescription Coverage and
Medication Use, HCFR, 2003, showed that with Hispanic and Black
Medicare beneficiaries without drug coverage used 10-40 percent
fewer medications than Whites with the same illness, and spent
up to 60 percent less in total drug costs.
3. The same study showed that Medicare beneficiaries with the
same disease and type of prescription coverage found that
minorities tend to get less of chronic medication compared with
Whites.
4. The same study showed that Hispanics tended to use more
expensive drugs which might be an example of loyalty to brands.
Literature about Medicare and minorities with a focus on the ESRD
program:
5. Daumit study of 1999 was an analysis of patients who gained
Medicare coverage through the ESRD program and found a three-
fold difference in the use of clinical procedures by patient
ethnicity nearly disappeared following the acquisition of the
special ESRD Medicare coverage.
Medicare Part D
Despite the plan to have at least two drugs in each class provided
to patients in a drug plan; pharmacy and therapeutic committees, CMS
evaluation of formularies and benefit management tools, there are major
areas of variance for all Medicare beneficiaries:
Prescription drugs covered
How much you have to pay
Which pharmacies you can use
Dual Eligibles plan included random enrollments in plans, with more
chance for mismatch of needed meds.
CMS is to be commended for its Hispanic media outreach efforts--
targeting Hispanic dense metropolitan areas and working with national
and local partners as well as the coalition development that NHMA is
involved in. NHMA is also working in partnership with United Health
Group/Ovations and mailed Medicare Part D information to 33,000
Hispanic physicians.
But NHMA has continued to receive many calls from physicians having
problems with the transition of dual eligibles, confusion of our
community elderly. Two examples from San Diego area--Ophthalmologists
in private practice--From January 3rd to 6th--129 dual eligible
patients were seen and 60% were in drug plans that did not cover their
ophthalmic medications. A cancer patient was refused her pain
medication by the new drug plan which would have resulted in fatal drug
withdrawal.
Another issue from callers includes the lack of ability of small
pharmacies in our communities being able to compete with the chain drug
stores using their branding on labels for the Medicare Part D benefit
prescriptions. Latinos have thought they could only go to these chain
drug stores now.
Thus, CMS and its partners need to do more comprehensive education
and reinforcement of marketing to increase enrollment in our hard to
reach communities, especially minority and the poor.
RECOMMENDATIONS
1. Research on prescription medications and Hispanic patterns
of use
a. Closing the gaps in medication use by race and
ethnicity--it becomes important to study the extent to
which the differences are due to provider or
beneficiary behavior amenable to change
b. Loyalty to brands for Hispanics and drug plan
selection
c. Affordability and simple enrollment procedures
2. Build upon the CMS public health campaign to correct
misperceptions about the importance of treatment adherence,
targeted to Hispanics
3. Increase culturally designed education media programs with
Spanish media
a. About the importance to enroll in Medicare Part D
managed care vs stand alone plans--need to be discussed
in detail with our communities
b. How to use medications and how to use them as a
part of your daily activities
c. Identify activities that work and share them
4. Support demonstrations with Hispanic physicians and patient
communication and compliance and lessons learned for the non-
Hispanic physicians and providers in our communities
5. Train public health leaders about Hispanics and health,
based on this Medicare experience
6. Require cultural competency in licensure CME and encourage
more physicians to understand Hispanic patient needs,
challenges
7. Health care facilities--hospitals, nursing homes need
standards for cultural competence and language services and use
of community workers to help with education (promotoras)
8. Include new efforts at developing symbols on signs
(``Hablamos Juntos'' RWJF program) for LEP patients in Medicare
Part D program development
9. Reforms needed--
a. Dual Eligibles need a longer transition with
monitoring and report to Congress on the progress and
the challenges to address
b. Simple co-payments messages needed and less
variability in ``basics'' with drug plans--to decrease
the confusion for elderly
c. Formulary monitoring at the Federal level--couldn't
there be a direct pharmaceutical company to Medicare
``stockpile'' that can provide medications to be
purchased by the drug plans for extra drugs needed that
were not on their formulary (to decrease patients
falling through the cracks due to glitches in the
system)
d. Pharmacies should be able to continue dispersing
without drug plan coverage, allowing for the transition
issues--perhaps with a monitoring by the Federal
Government
e. Eliminate penalties for those who didn't enroll by
the May 15th deadline
10. Quality of care--needs to include incentives to make the
system more responsive to Hispanics and their families.
11. Increase outreach payments for rural, inner city and
teaching hospitals and other safety net providers
12. Consider the programs that could be developed in Medicare
GME funding--Incorporate Medicare information into medical
education so that residents and medical students can explain
the program to patients.
13. Lastly, the Office of Minority Health at DHHS should
increase the participation of all national minority health
organizations with the effort and link CMS education efforts at
their national conferences, websites, newsletters, etc. More
community help is needed in addition to the phone hotlines and
online counseling supported by CMS to outreach to Hispanics
about Medicare Part D.
______
References
Kaiser Family Foundation Analysis of 2002 Medicare Current
Beneficiary Survey Cost and Use File and A Profile of African
Americans, Latinos, and Whites with Medicare, November 2005
Urban Institute New Federalism Report, 2005
Health Care Financing Review articles on racial disparities with
Medicare, CMS searches.
CMS Hispanic Media Project Fact Sheet, January 17, 2006
Agency for Healthcare Research and Quality, U.S. DHHS, Health
Disparities Report, January, 2006
West Valley City, Utah 84170
May 2, 2006
This statement is meant to clarify for the Committee on Ways and
Means the horrendous and confusing chaos caused by the recent
implementation of the Medicare Drug Benefit Program, and to beg the
Committee's review and recommended revision of the Medicare Drug
Benefit Program so that it benefits the people it was meant to help,
rather than the drug companies and the insurance sellers who are
currently cleaning house at the expense of the U.S. Government and the
Medicare Trust Funds.
Currently, the Medicare Drug Benefit Program is so desperately
fragmented and unreliable because the Plan does not allow control by
Social Security or Medicare, but rather allows private insurance
companies and drug entities to set the rules and the standards under
which this huge and complicated program is run. Instead of placing this
program under the responsibility and control of the government agencies
footing the largest portion of the bill, the Administration simply
opened the doors to private contractors who cannot or will not take
responsibility for the responsible handling of the program in a manner
that satisfies the public need.
Billions of tax dollars are being poured into this program, but the
public continues to suffer indignities and hardships because in passing
this law, the Administration took away many of the excellent drug
benefit plans many seniors and disabled persons enjoyed, and laid in
their place this convoluted, incomprehensible, and unreliable program
that has left a large number of its intended beneficiaries without drug
coverage for months on end, without the simple ability to contact
Medicare or SSA to straighten out simple technical problems, and
without any support system to help them find their way through this
mess!
I see the way this program works because I am involved in a very
intimate way with the people it so greatly affects (and disadvantages).
I am a front line service representative for the Social Security
Administration, and have worked in this capacity for over a quarter of
a century. In the entire time I have worked with SSA and Medicare, I
have never before witnessed a more ridiculous, incomprehensible and
just plain stupid set of circumstances as this new Medicare Drug
Benefit Plan presents.
Medicare and Social Security have been the cornerstones of the
programs that seniors, survivors, and disabled persons have come to
rely on over the past seventy years; a grouping of beneficial programs
run by responsible federal employees who have been thoroughly trained
in the concepts of the body of laws governing the programs. People have
come to respect and trust those of us who administer these programs,
and now they have come up against a new ``Medicare'' program like none
other before it . . . geared to the profiteering of large companies who
see another way to suck billions of dollars off the current
Administration's desire to ``contract out'' government activities.
It is a free-for-all, clear and simple, and now our elderly and
disabled beneficiaries are actually receiving confusing, unwelcome
solicitation calls from these companies, frightening them and confusing
them all in the hopes of getting a new customer to buy their product. I
speak with dozens of people a day who come to Social Security and wait
an hour or two in our waiting rooms in an attempt to ``get this mess
straight''. But SSA does not have any input into this mess, because we
are not in the loop. We are told to refer these poor souls to 1-(800)
Medicare. (Or the drug insurance providers.) These people come to us
because we are the ones who have always been there to fix the messes,
but we can't fix this. And we can't do anything but point them along to
another source.
I have called Medicare in behalf of dozens of these poor souls who,
in their 80's or mentally unable to cope with confusion, are forced to
call a voice-recognition call answering machine that ``sorts'' the
calls by category, and forwards the calls to the ``proper component''.
I have called the 1-(800)-MEDICAR number, and managed to get through to
the lines, then I am sent to a ``disenrollment specialist'' line, where
I am told ``call counts are currently heavy. Please call back at
another time''. Or, after going through fifteen minutes of talking to a
computer, I am sent to a ``problem specialist'' who tells me that she
will ``e-mail CMS Regional Office'' with the problem, because she has
no way to help the person, since she is simply a call center employee
who cannot take any action or give any real answers, and we must wait
three to five days for a Medicare person to call the beneficiary back.
If this is the service that Medicare is currently giving to these
persons, I can see why they are crowding into SSA offices to try to get
help which we cannot render.
I feel that the new program drops the ball completely. There is
nothing but ``buck-passing'' happening between the Medicare call
centers and the providers. Since SSA is not even in the loop here, I am
amazed that these people have the temerity to tell beneficiaries that
they must contact SSA when the drug premiums are deducted from their
Social Security checks after they have already paid the premiums by
personal check after receiving a threat that they will be disenrolled
for non-payment.
Under this program, Medicare sends SSA notice to begin deducting
premiums from checks, (which is about our ONLY involvement here) while
the drug insurance providers are busily sending bills to the
beneficiaries for the very same premiums! SSA cannot do anything but
continue to deduct the premiums until CMS orders us to stop. We now
hear that it is taking CMS up to 90 days to change enrollments for
people who are not satisfied with the providers, or cannot get the
drugs they require from the providers. In the meantime, we are still
taking premiums out for the OLD provider, while the beneficiary is
being billed for services from the NEW provider. (And neither provider
is furnishing the expected discounts.)
Many times, the providers have been changed without notice to the
beneficiary, and these poor folks cannot get their prescriptions from
either provider! I have had many elderly beneficiaries tell me that
they have gone without life-preserving drugs for up to three months at
a time because ``something'' was wrong with their enrollment
information, or the provider did not have them listed, or what-have-
you. When I have called the drug Program provider shown on our records
from CMS, the provider simply says, ``We don't have proper
authorization and we cannot give them their drug discounts until CMS
gets the computer records fixed''. Calling CMS results in the answer
``the provider is not giving us the proper information''.
This is the MOST irresponsible way of handling the Medicare Drug
Benefit Program that could possibly have been hatched by a bunch of
people who have absolutely NO concept of what they are doing.
Instead of giving this program to SSA, and saying ``make it work,''
the Administration simply handed it over to the private sector, and the
bidding wars began. And only after the program bankrupts the Medicare
trust funds will the Administration admit that this was not such a neat
plan, after all. Perhaps there will be a new Administration in place
when that happens, and we can start over. Hopefully the American people
will not have been completely fleeced by that time, and there will
still be a trust fund to rely on.
Yes, there is a great need for this program, BUT NOT AS IT IS NOW.
The American people deserve better treatment. We do not need a program
that uses taxpayer's money to further subsidize the profits of huge
drug companies and insurance providers. They make enough profit with
their price gouging as it is!
The VA dickers with drug companies over the prices they must pay
for medicines for the millions of veterans they serve. Medicare is not
allowed to do that. Before this new program, many drug companies were
expected to give a percentage of FREE drugs to millions of Americans on
limited income. Now they can make money off these needy folks by
billing the government for the same drugs they once gave for free. This
is a program crafted by profiteers for other profiteers. It is a
travesty of what it should be.
I know that this is not the time for semantics and emotions, but it
IS the time for a realistic review of the inadequacies and
disappointing inequity of this huge and expensive pork barrel. It is
time to listen to the people this program is so greatly affecting, and
turn the reins over to a tried and true administration whose employees
have been handing social insurance programs for nearly three quarters
of a century, and who have no personal interest in making a quick
profit at the taxpayers' expense.
Get this program into the proper hands, and get it running right!
Give SSA the people they need to run it, and you will find that it can
be run in a manner that will make sense, and have a positive impact on
the people it was meant to serve, by cutting out the confusion, the
waste, and the sheer ponderous stupidity of it all.
You are all well aware (or you should be by now) that SSA's
overhead expenses are less than 1% of income. What private organization
can boast that kind of conservatism? In this age of pushing for
``smaller government,'' the Administration is gearing the system for
disaster. Touting to the public that private industry can handle this
type of program better than seasoned government agencies is like
shouting out that wolves make the best babysitters!
So please take this opportunity to scream for help. And scream in
the right direction, because the wolves are at the door here, and the
babies need your intervention!
Thank you for considering this statement. I trust that you will
open your minds to this information, and present it in the near future
to those who need to hear from private citizens, and not just big
business interests.
Frances Romney
Sandy, Utah 84094
May 3, 2006
Distinguished Members of Congress:
I am 69 years old and hold a PhD. from MIT. The last bit of
information is provided as some indication that I can probably
understand and digest difficult concepts.
I have attended five presentations for seniors by insurance
companies. These presentations were advertised as being about Medicare
Part D drug plans they offer. There are about 40 such plans offered in
my area, so I've barely been able to scratch the surface. In each case
10 percent or less of the presentation was about the drug plans
offered. The remainder was a pitch for the company's Medicare Advantage
Plans, some of which include drug coverage and some of which do not.
The point here is that the insurance companies are using Medicare Part
D as a lure to get seniors to buy their Advantage Plans. That is not
terribly surprising in the world of ``privatization.''
As these presentations continued through the touted Advantage Plans
seniors were confronted with perhaps hundreds of data points--
copayments, deductibles, network participants, formularies, out-of-
network coverages, etc.--most of which differ from one plan to another.
Seniors are inundated with numbers, most of which have little to do
with the drug coverages offered, or not offered, by the insurance
companies.
I understand that you, as members of Congress, have excellent
health benefits. But even those seniors who have never been elected to
Congress have little or no experience in comparing health insurance
plans. That was usually done for them by their employers. As it is
presented, the amount of data that appears to have to be absorbed to
make an intelligent choice (an underlying cornerstone of the free
enterprise system in action) is overwhelming.
I implore you to at least give seniors more time to make a choice
of a Medicare Part D plan without being penalized. A better solution
would be to fold the entire prescription drug coverage under
traditional Medicare and use the buying power of the Medicare program
to negotiate lower drug costs with the drug manufacturers. As far as I
can tell the insurance companies have only been negotiating with
pharmacies, not manufacturers.
Thank you.
Arthur Sutherland