    [House Hearing, 110 Congress]
    [From the U.S. Government Publishing Office]

                       HEARING ON BENEFICIARY PROTECTIONS

                               IN MEDICARE PART D
    =======================================================================

                                    HEARING

                                   before the

                             SUBCOMMITTEE ON HEALTH

                                     of the

                          COMMITTEE ON WAYS AND MEANS
                         U.S. HOUSE OF REPRESENTATIVES

                           ONE HUNDRED TENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 JUNE 21, 2007

                                   __________

                               Serial No. 110-50

                                   __________

             Printed for the use of the Committee on Ways and Means

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                          COMMITTEE ON WAYS AND MEANS

                     CHARLES B. RANGEL, New York, Chairman

    FORTNEY PETE STARK, California       JIM MCCRERY, Louisiana
    SANDER M. LEVIN, Michigan            WALLY HERGER, California
    JIM MCDERMOTT, Washington            DAVE CAMP, Michigan
    JOHN LEWIS, Georgia                  JIM RAMSTAD, Minnesota
    RICHARD E. NEAL, Massachusetts       SAM JOHNSON, Texas
    MICHAEL R. MCNULTY, New York         PHIL ENGLISH, Pennsylvania
    JOHN S. TANNER, Tennessee            JERRY WELLER, Illinois
    XAVIER BECERRA, California           KENNY HULSHOF, Missouri
    LLOYD DOGGETT, Texas                 RON LEWIS, Kentucky
    EARL POMEROY, North Dakota           KEVIN BRADY, Texas
    STEPHANIE TUBBS JONES, Ohio          THOMAS M. REYNOLDS, New York
    MIKE THOMPSON, California            PAUL RYAN, Wisconsin
    JOHN B. LARSON, Connecticut          ERIC CANTOR, Virginia
    RAHM EMANUEL, Illinois               JOHN LINDER, Georgia
    EARL BLUMENAUER, Oregon              DEVIN NUNES, California
    RON KIND, Wisconsin                  PAT TIBERI, Ohio
    BILL PASCRELL, JR., New Jersey       JON PORTER, Nevada
    SHELLEY BERKLEY, Nevada
    JOSEPH CROWLEY, New York
    CHRIS VAN HOLLEN, Maryland
    KENDRICK MEEK, Florida
    ALLYSON Y. SCHWARTZ, Pennsylvania
    ARTUR DAVIS, Alabama

                 Janice Mays, Chief Counsel and Staff Director

                      Brett Loper, Minority Staff Director

                                     ______

                             SUBCOMMITTEE ON HEALTH

                    FORTNEY PETE STARK, California, Chairman

    LLOYD DOGGETT, Texas                 DAVE CAMP, Michigan
    MIKE THOMPSON, California            SAM JOHNSON, Texas
    RAHM EMANUEL, Illinois               JIM RAMSTAD, Minnesota
    XAVIER BECERRA, California           PHIL ENGLISH, Pennsylvania
    EARL POMEROY, North Dakota           KENNY HULSHOF, Missouri
    STEPHANIE TUBBS JONES, Ohio
    RON KIND, Wisconsin

    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______

                                   WITNESSES

    Leslie V. Norwalk, Acting Administrator, Centers for Medicare and
      Medicaid Services..............................................    12
    Kathleen M. King, Director, Medicare Payment, U.S. government
      Accountability Office..........................................    19

                                     ______

    Steve O'Brien, M.D., Medical Director, Alta Bates Summit East Bay
      AIDS Center, Oakland, California...............................    69
    William Fleming, PharmD, Vice President, Pharmacy and Clinical
      Integration, Humana, Louisville, Kentucky......................    78
    Paul Precht, Policy Director, Medicare Rights Center.............   123
    Tom Maher, Regional Director, Medicare Today, Concord, New
      Hampshire......................................................   129
    Vicki Gottlich, Senior Policy Attorney, Center for Medicare
      Advocacy.......................................................   132

                           SUBMISSIONS FOR THE RECORD

    American Association of Retired People, statement................   146
    American College of Physicians, statement........................   149
    Assisted Living Federation of America, statement.................   153
    Consumers Union, statement.......................................   153
    Long Term Care Pharmacy Alliance, statement......................   154
    Mental Health America, statement.................................   158
    National Association of Drug Chain Stores, Alexandria, Virginia,
      statement......................................................   160
    National Center for Assisted Living, statement...................   164
    National Home Infusion Association, statement....................   166
    National Senior Citizens Law Center, Oakland, California,
      statement......................................................   170
    Statement of Alliance of Claims Assistance Professionals,
      statement......................................................   173

             HEARING ON BENEFICIARY PROTECTIONS IN MEDICARE PART D

                                  ----------

                            THURSDAY, JUNE 21, 2007

                 U.S. House of Representatives,
                           Committee on Ways and Means,
                       Subcommittee on Select Revenue Measures,
                                                        Washington, D.C

        The Subcommittee met, pursuant to notice, at 2:00 p.m., in
    room 1100, Longworth House Office Building, Hon. Fortney Pet
    Stark [Chairman of the Subcommittee] presiding.
        [The advisory announcing the hearing follows:]

    ADVISORY

    FROM THE
    COMMITTEE
     ON WAYS
    AND
    MEANS

                  SUBCOMMITTEE ON HEALTHFOR IMMEDIATE RELEASE

                                                                   CONTACT:
    FOR IMMEDIATE RELEASE
    June 21, 2007
    HL-14

    Stark Announces a Hearing on Beneficiary Protections in Medicare Part D

        House Ways and Means Health Subcommittee Chairman Pete Stark (D-CA)
    announced today that the Subcommittee on Health will hold a hearing on
    protecting beneficiaries in Medicare Part D plans. The hearing will
    take place at 2 p.m. on Thursday, June 21, 2007, in Room 1100,
    Longworth House Office Building.

        In view of the limited time available to hear witnesses, oral
    testimony at this hearing will be from the invited witness only.
    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:

        The Medicare Modernization Act of 2003 (P.L. 108-173) created a new
    Medicare Part D voluntary prescription drug program for beneficiaries.
    Since January 2006, beneficiaries have had the opportunity to enroll in
    private-sector prescription drug plans. As of March 2007, 16.9 million
    beneficiaries were enrolled in stand-alone prescription drug plans
    (PDPs) and another 7.1 million were enrolled in Medicare Advantage
    plans offering prescription drugs (MA-PDs). Millions more Medicare
    beneficiaries receive drug coverage through other sources like the
    Department of Veterans Affairs or a former employer.

        In nearly every state, beneficiaries must choose among more than 50
    different drug plan options offered by eight to 40 different plan
    sponsors. Each plan can offer a unique benefit structure as long as it
    is actuarially equivalent to the standard benefit. This forces
    beneficiaries to compare widely varying premium, cost-sharing,
    formulary, and utilization management designs. Beneficiary confusion
    about the number and type of plan offerings has led to calls for
    prescription drug plan standardization, similar to the Medigap market,
    or for the creation of a drug program administered by Medicare that
    competes with private sector plans.

        Implementation of the new Part D drug program was fraught with
    problems. Beneficiaries had trouble navigating the multitude of drug
    plan choices, and even after signing up many still struggled to get
    their drugs at the pharmacy counter. While many of those early problems
    have been fixed, Congress has an obligation to make sure Part D runs
    smoothly and beneficiaries are adequately protected. Advocates for
    Medicare beneficiaries have expressed ongoing concerns with enrollment
    periods and practices, formulary requirements and exceptions, appeals
    and grievance procedures, marketing abuses and beneficiary education.

        In announcing this hearing, Chairman Stark said: ``Part D has been
    up and running for a year and a half, and Congress has yet to look at
    any changes necessary to protect beneficiaries in this new program.
    It's time to shine the light on Part D and see if there are some simple
    things we can do to improve the program for beneficiaries and
    taxpayers.''

    FOCUS OF THE HEARING:

        The hearing will focus on Medicare Part D, ongoing beneficiary
    protection issues in the new program, and possible statutory changes
    necessary to improve the program for beneficiaries and taxpayers.

    DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

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        Chairman STARK. We will begin our hearing.
        We focused a lot of attention last month on the low-income
    subsidies for Part D, and we are going to continue today taking
    a look at how it is working overall for beneficiaries. We don't
    intend for today's hearing to be a cheerleading session, and I
    hope we will lay the groundwork for improvements that we might
    possibly be able to achieve in this year's legislation. The
    program, it is new, but it doesn't mean that we can't, working
    together, acknowledge ways in which we could improve it.
        I am going to ask unanimous consent that the rest of this
    magnificent statement that I have prepared, in the interest of
    time, because I understand in another 20 or 30 minutes we may
    have some votes, so for the rest of this statement appear in
    the record in its entirety.
        [The prepared statement of Mr. Stark follows:]

        [GRAPHIC] [TIFF OMITTED]
        [GRAPHIC] [TIFF OMITTED]

        Chairman STARK. I recognize Mr. Camp for any comments he
    would like to make.
        Mr. CAMP. Thank you, Mr. Chairman.
        I have a pretty long statement as well, which I will ask
    unanimous consent to be placed in the record. In the interest
    of time, I will shorten mine as well.
        I just want to say that we have almost 28 million Medicare
    beneficiaries receiving help with prescription drug costs
    because of the Medicare Modernization Act. A total of 39
    million Medicare beneficiaries have drug coverage, and that is
    a significant success. Seniors are saving an average of 1,200
    off the cost of prescription drugs this year, and national
    polls show that more than 80 percent of seniors are satisfied
    with their benefits.
        Obviously, is Part D perfect? Of course not. Can Part D be
    improved? I absolutely believe it can. But I think we need to
    tread carefully when considering fundamental changes in this
    important, successful and well-liked program.
        I just want to make sure that, having looked at some of the
    testimony that we have today, there may be a few inaccuracies
    in some of those on the second panel; and I would like us to
    address at least the testimony. Two witnesses are going to say
    that CMS does not notify beneficiaries of their right to
    appeal, and in my knowledge CMS does dedicate 10 pages in the
    Medicare and You Handbook, which is now issued to every
    beneficiary.
        Obviously, we hold these hearings to get a better
    understanding of important issues that help guide us as we try
    to legislate, but I do also want to make certain that the
    information the Committee receives is accurate. So, I look
    forward to hearing the testimony today and shedding light on
    this very important program, and I will have the rest of my
    statement placed in the record.
        Thank you, Mr. Chairman.
        Chairman STARK. Without objection.
        [The prepared statement of Mr. Camp follows:]

        [GRAPHIC] [TIFF OMITTED] 47757A.003

        [GRAPHIC] [TIFF OMITTED] 47757A.004

        [GRAPHIC] [TIFF OMITTED] 47757A.005

        [GRAPHIC] [TIFF OMITTED] 47757A.006

        Chairman STARK. If nobody else cares to enlighten us at
    this point, we will turn to our first panel. It is a pleasure
    to have the Acting CMS Administrator, Leslie Norwalk, back with
    us today; and we have the privilege of being enlightened by Ms.
    Kathleen King from the Government Accountability Office, which
    I assume you know as GAO.
        Thank you both for joining us; and can you tell us,
    starting with Ms. Norwalk, how we might improve Part D and make
    it work better for our beneficiaries?

     STATEMENT OF LESLIE V. NORWALK, ACTING ADMINISTRATOR, CENTERS
                   FOR MEDICARE AND MEDICAID SERVICES

        Ms. NORWALK. I am happy to do that, Chairman Stark. Good
    afternoon. I will probably do a little bit of cheerleading
    first, but I promise to get to that in my statement.
        Chairman Stark, Representative Camp and distinguished
    Members of the Subcommittee, I am pleased to be here to discuss
    the Medicare prescription drug benefit, or Part D. Today, 24
    million people in Medicare are enrolled in Part D. For more
    than a year, surveys have consistently told us that over 80
    percent of beneficiaries are satisfied with their coverage.
    Part D is working especially well for those needing assistance
    most urgently. Nearly nine out of ten new eligibles report
    satisfaction with the Medicare drug benefit.
        As you know, the Medicare Modernization Act established a
    number of important beneficiary protections under Medicare Part
    D which help ensure that beneficiaries do, in fact, have access
    to the covered drugs they need and also help prevent
    discrimination against certain classes of beneficiaries.
    Seamless policies implementing these protections require plans
    to provide a wide range of information to enrollees regarding
    their rights and benefits under the plan.
        All Part D plans must contract with a broad-knit range of
    network pharmacies throughout their service area, conform to
    detailed marketing guidelines, operate toll-free customer
    service lines with convenient hours and participate in consumer
    satisfaction surveys.
        Plan formularies are required to be submitted annually for
    CMS review and approval. We follow a rigorous multi-step review
    process to ensure that plan formularies include a wide range of
    Part D-covered drugs across all therapeutic drugs and
    categories. We also review plan utilization management
    techniques, such as prior authorization or step therapy, to
    ensure that they are not being used to discriminate against
    beneficiaries, particularly those with high drug costs; and
    these are techniques widely used in Medicaid and the commercial
    market.
        Utilization management techniques may be viewed
    appropriately as an added benefit for plan enrollees. Step
    therapy and prior authorization are routinely used to ensure
    that dosing follows the updated label or to protect against
    potentially lethal drug interactions.
        While these utilization management techniques may sometimes
    cause delays or frustration, they in fact protect
    beneficiaries, which is our utmost priority. This is
    particularly the case given the number of beneficiaries with
    multiple doctors that may know the patient's full drug history.
        Plans also must have grievance coverage determination in
    appeals processes that are consistent with statutory
    requirements and CMS policy. Beneficiaries may request an
    exception to gain coverage of nonformulary drugs from their
    plan, and once granted that exception remains in effect through
    the duration of the benefit year.
        Our policies require that plans grant exceptions when
    medically necessary based on a prescribing physician's
    supporting statement. For example, if a physician indicates and
    provides supporting medical evidence that the covered Part D
    drug on any tier of a plan's formulary would not be as
    effective and/or would have an adverse effect for a planned
    enrollee, that plan must cover the prescribed non-formulary
    drug.
        Plans must issue decisions on requested exemptions as
    quickly as an enrollee's health status requires. Plans must
    also have procedures to expedite these determinations and
    render decisions within 24 hours. As an enrollee, his or her
    designated representative, or the enrollee's prescribing
    physician, may request that a Part D plan expedite coverage
    determination when the enrollee or the physician believes that
    waiting for a decision under the standard timeframe may place
    the enrollee's health in serious jeopardy. If an enrollee is
    dissatisfied with the coverage determination, he or she can
    appeal.
        The prescribing physician may also ask for an expedited
    first-level appeal or redetermination on behalf of the
    enrollee. Standard redeterminations must be communicated within
    7 days after receiving the request. For an expedited
    redetermination, they must be done within 72 hours after the
    request.
        If a plan issues an adverse redetermination, they are
    required to give the enrollee notice that includes information
    on how to do a further appeal with an independent review
    entity, or IRE. To help ensure these requirements are followed,
    CMS collects data on the number of appeals that are forwarded
    by the plan to the IRE for consideration and analyze that data
    and investigate outliers. We also receive appeal information
    directly from the IRE.
        We have done a whole lot to make the coverage determination
    and appeals process more understandable and accessible for
    beneficiaries, as Representative Camp mentioned, including a
    whole host of publications and so forth. We also have given the
    pharmacy a standard form to give to beneficiaries when drugs
    are denied at the counter.
        In addition to these, we have established baseline measures
    for tracking plan performance across a wide range of other
    metrics, including customer service, satisfaction surveys,
    complaint data, appeals data, disenrollment rates, generic
    dispensing and various quality measures.
        As a part of our routine monitoring, CMS immediately
    contacts plans to resolve any identified patterns of
    unacceptable performance or to prevent potential problems. We
    will also issue report cards later this year on plan
    performance so beneficiaries can look at them for the upcoming
    enrollment season.
        We also take very seriously any violation of program
    requirements. When warranted, we initiate compliant actions
    against plans not meeting the baseline measures. Actions may
    range from corrective action plans to civil monetary penalties
    or removal from the program, depending on the extent to which
    plans have violated the requirements.
        Our efforts are continually evolving. For example, we are
    working to improve methods of identifying companies focused on
    compliance audits in order to make more effective use of
    available resources. We have a risk contractor assessment
    methodology that identifies organizations in program areas
    representing the greatest compliance risks to Medicare
    beneficiaries in the government and expect to have an enhanced,
    centralized, data-driven risk assessment in place for the 2008
    benefit year.
        With ongoing vigilance and improvements such as this, I am
    confident we will continue to see high levels of beneficiary
    satisfaction with Part D and will effectively manage plan
    compliance as problem areas arise.
        Finally, the number one challenge CMS has encountered in
    implementing the benefit is the requirement that beneficiaries
    must be allowed to have their premiums withheld from Social
    Security checks. We have dedicated more staff, more resources
    and more time on this considerable issue than any other, and it
    is our first and foremost concern.
        We are in the final stages of completing our review of
    impacted beneficiaries who have premium withhold issues. Our
    next step is reconciling all 2006 premiums, and we expect to
    complete this in a matter of months.
        Unfortunately, there is no quick fix for this problem. CMS
    and the Social Security Administration will continue to devote
    significant resources to solving the numerous underlying issues
    that lead to inaccurate premiums and beneficiary cost sharing
    due to the premium withhold requirements.
        Thank you, and I would be happy to answer any questions you
    might have. My written statement I think you should have for
    the record.
        [The prepared statement of Ms. Norwalk:]
       Statement of Leslie V. Norwalk, Acting Administrator, Centers for
                         Medicare and Medicaid Services
        Good afternoon Chairman Stark, Representative Camp and
    distinguished members of the Subcommittee. I am pleased to be here
    today to discuss the Medicare prescription drug benefit (Part D) and in
    particular, beneficiary protections and plan oversight. Following the
    enactment of Part D with the Medicare Prescription Drug, Improvement
    and Modernization Act of 2003 (MMA), CMS undertook an unprecedented
    outreach campaign, resulting in approximately 90 percent of eligible
    beneficiaries having creditable coverage for prescription drugs through
    Part D or other sources by the end of the initial enrollment period
    (May 15, 2006). CMS has worked equally hard to ensure that once
    enrolled, people with Medicare are able to take advantage of their
    prescription drug coverage without difficulty.
    Part D in 2007: Lower Costs and Improved Satisfaction
        In many respects, Part D is the single most important benefit
    addition in the history of the Medicare program. Nearly 24 million
    beneficiaries are enrolled in a Part D Prescription Drug Plan (PDP) or
    Medicare Advantage Prescription Drug Plan (MA-PD). More importantly,
    according to recent surveys, overall satisfaction with Part D continues
    to be high among enrollees in the Medicare drug benefit. In September
    of 2006, a survey conducted for the Medicare Rx Education Network
    reported that over 80 percent of Medicare beneficiaries are satisfied
    with their current coverage and drug plans, including beneficiaries
    eligible for both Medicare and Medicaid (dual eligibles), who receive
    the low income subsidy (LIS).\1\ According to the follow-up survey
    conducted by the Network in early January 2007, overwhelming majorities
    of enrollees give Part D high ratings along a number of dimensions: 91
    percent said the plan is convenient to use; 89 percent said they
    understand how the plan works; 86 percent said the plan has good
    customer service; 81 percent said the co-pays are affordable; 79
    percent said the monthly premium is affordable; and 77 percent said the
    plan covers all medicines. Part D is working especially well for those
    who need assistance most urgently. The Medicare Rx Education Network
    reports that almost 9 out of 10 dual-eligible enrollees are satisfied
    with their coverage.
    ---------------------------------------------------------------------------
        \1\ Results are based on a telephone survey of 802 seniors ages 65+
    enrolled in Medicare, conducted September 1-7, 2006, by KRC Research
    for the Medicare Rx Education Network. Of those surveyed, 82 percent
    are somewhat (29 percent) or very (53 percent) satisfied with their
    coverage. The margin of error for the full sample is + 3.5 percentage
    points.
    ---------------------------------------------------------------------------
        In addition to beneficiary participation and satisfaction, the
    program also has resulted in significant savings for beneficiaries and
    lower-than-projected costs for taxpayers. Beneficiaries are saving an
    average of 1,200 a year, with estimated average premiums in 2007 now at
    $22 a month, down from an average of $23 a month in 2006 and 42 percent
    lower than the original estimate of 37 a month.
        The latest cost projections for Part D through 2015, released on
    April 23 with the 2007 Medicare Trustees Report, are 13 percent lower
    than estimated in the 2006 Trustees Report (and substantially lower
    than the original estimates from 2003). Plan bids for 2007 were 10
    percent lower than in 2006, as a result of intense competition among
    plans to attract and retain enrollees and plans' expectations to
    further increase use of inexpensive generic drugs, rather than more
    costly brand-name equivalents. In addition, overall prescription drug
    costs have increased much more slowly during 2004-2006 than in prior
    years. Together with additional factors, these developments have
    reduced projected Part D costs significantly compared to the estimates
    in the 2006 Trustees Report.
    What a Difference a Year Makes: Lessons Learned
        When CMS last appeared before this Subcommittee to testify
    regarding the Part D prescription drug benefit, we reported on our
    efforts to resolve a number of systems and process issues that impacted
    some Part D enrollees' ability to access covered drugs. CMS worked hard
    to find and fix the problems, and took significant steps early to avoid
    similar issues in 2007. We worked with plans, pharmacists and States to
    improve data systems impacting beneficiary access. For example, we
    facilitated better communication between plans and pharmacies, which
    resulted in upgrades to pharmacy software systems that will improve
    messaging between pharmacies and plans for better customer service.
    Also, throughout the year, CMS made a series of systems and process
    changes and enhancements to improve our file and data exchanges with
    plans, SSA and the States to improve performance and accuracy in
    beneficiary enrollment and benefits processing.
        In September of 2006, CMS published a ``Readiness Checklist'' for
    all prescription drug plans, reminding them of their obligations, key
    dates, and vital tasks to ensure a smooth annual enrollment season and
    transition to the 2007 benefit year. The Readiness Checklist included
    elements related to call center requirements, complaint resolution,
    systems testing and connectivity, data submission and file processing,
    enrollment procedures, beneficiary marketing and communication
    strategies, beneficiary and pharmacy customer service, and timely
    payment to pharmacies.
        In early November 2006, CMS asked all plans to report on their
    successes and any problems encountered in accomplishing the tasks on
    the Readiness Checklist. The results from this exercise served two
    important functions: First, it reassured CMS that the vast majority of
    plans were fully prepared for annual enrollment and the new benefit
    year, and that they had successfully implemented our guidance and
    requirements. Second, it identified areas where some plans indeed were
    having problems--for example, some plans reported that they were not
    able to issue the Annual Notices of Change (ANOCs) within the timeframe
    specified by CMS. Using this information from the Readiness Checklist,
    CMS was able to quickly implement a strategy to ensure that
    beneficiaries who did not receive an ANOC in a timely manner would be
    granted a special election period to extend the period of time they had
    to make a decision about their 2007 plan choice. CMS intends to repeat
    the Readiness Checklist exercise again this fall, in preparation for
    the 2008 plan year.
        In the case of dual eligibles, CMS worked vigorously to address and
    fix the problems that caused the transition issues in 2006 in order to
    ensure a smoother transition in 2007. In the fall of 2006, CMS
    identified a handful of plans that either would be receiving auto-
    enrollees and facilitated enrollees for the first time or would receive
    a significantly higher volume of auto-enrollees and facilitated
    enrollees in 2007 compared to 2006. To ensure that these beneficiaries
    would experience a smooth transition to receiving their prescription
    benefits through a Part D plan, CMS conducted auto-enrollment and
    facilitated enrollment readiness audits. These audits were very
    thorough and examined all of the systems and other processes plans
    needed to have in place to successfully process the enrollment records,
    communicate with beneficiaries, and provide service. Any plan that was
    not fully prepared to undertake this important task was excluded from
    receiving auto-enrollments and facilitated enrollments. CMS plans to
    administer readiness audits again in 2007, in preparation for the 2008
    benefit year.
        To ensure a smooth transition for the existing LIS population
    specifically, CMS worked with States and SSA to identify dual eligibles
    and other limited-income beneficiaries (QMB, SLMB, Q-1 and SSI)
    beneficiaries who would again automatically qualify for LIS in 2007.
    Such beneficiaries were ``re-deemed'' for the low income subsidy for
    all of 2007. CMS also identified those who would not be automatically
    eligible in 2007, and worked with SSA to contact these individuals by
    mail in September of 2006. The notification explained the loss of
    deemed status, encouraged the beneficiary to apply for LIS, and
    provided an application for LIS with a postage paid envelope. It was
    CMS's goal to ensure that each of these beneficiaries was aware of
    their change in status and able to take action accordingly.
        Additionally, CMS provided guidance and information to State
    Medicaid Directors, including a list of the affected beneficiaries (at
    the zip code level), and sent information to plans about their affected
    members in early October so that they could conduct outreach (by phone
    or mail). Over the past several months, almost 50 percent of those who
    had lost their deemed status regained such status or applied for the
    subsidy and qualified for LIS with SSA. CMS has already provided
    guidance to States about our process for 2008, and we have been working
    with SSA to identify ways to reach out to those who lose deemed status
    to ensure that they apply with SSA as early as possible.
        CMS also anticipated transition issues related to the requirement
    that plan sponsors must qualify annually for automatic assignment of
    dual eligible beneficiaries. Due to the nature of the annual bidding
    process and the requirement that dual eligible beneficiaries be
    assigned only to plans that submit bids below the regional low-income
    benchmark (LIS benchmark), a strong potential existed that many plans
    qualified to accept auto-assignment of dual eligible beneficiaries in
    2006 might not qualify in 2007 resulting in a large-scale shift of this
    population in the new benefit year.
        To address this issue, as well as to promote effective competition
    that builds on the savings achieved through beneficiaries' plan choices
    in 2006, CMS is conducting a demonstration for 2007 that implements a
    transitional approach to determining the federal contribution to the
    drug benefit for low-income Medicare beneficiaries in 2007. This
    demonstration resulted in greater stability in zero-premium plan
    options for LIS beneficiaries, thus minimizing the need for
    beneficiaries to be reassigned for 2007. In addition, as another key
    aspect of CMS' efforts to minimize dual eligible beneficiary movement
    among plans, CMS is conducting a demonstration for 2007 that permits
    plans with premium increases of less than 2 above the LIS benchmark to
    qualify to retain their current LIS beneficiaries. Where the plan's
    premium increased by more than that amount, the beneficiary was
    reassigned to another plan offered by the same sponsor with a premium
    below the benchmark, where possible, to minimize transition issues. If
    a beneficiary had independently chosen that plan for 2006, CMS honored
    the decision for 2007, allowing the beneficiary to remain in their 2006
    plan. In these cases, plans notified individuals of their prospective
    premium increase in 2007 and of their right to change plans.
        Thanks to these efforts, fewer than 250,000 individuals needed to
    be re-assigned randomly to different prescription drug plan sponsors.
    These individuals received a letter on color-coded (blue) paper in
    November indicating that their 2006 plan's premiums were increasing for
    2007 and that they would be reassigned to a new plan.
        Finally, CMS has made important strides to promote a seamless
    transition for Medicaid-eligible individuals who are about to attain
    Medicare eligibility. In July of 2006, we asked States to begin
    submitting information to us concerning these individuals in advance of
    their Medicare eligibility so that CMS can deem them eligible for the
    LIS and assign them to a Medicare Part D plan before the start of their
    Part D eligibility. This prospective identification and enrollment
    process has resulted in the seamless transition of more than 10,000 new
    dual eligible individuals per month into Medicare Part D coverage.
    Beneficiary Protection and CMS Oversight of Part D Plans
        Medicare Part D includes beneficiary rights and protections similar
    to those in other parts of Medicare. These rights and protections are
    intended to ensure beneficiaries have access to covered Part D drugs,
    and prevent discrimination against certain classes of beneficiaries
    (e.g., those with high drug costs). For example, Part D plans are
    required to submit formularies for CMS review and approval, and to
    provide a wide range of information to beneficiaries on such matters as
    plan formularies and benefits. Plans also must have grievance, coverage
    determinations, and appeals processes that are consistent with CMS
    regulatory requirements. In addition to these protections, which are
    highlighted in greater detail below, all Part D plans must contract
    with a broad network of retail pharmacies throughout their service
    area; must conform to detailed marketing guidelines; must operate toll-
    free customer service lines with convenient hours; and must participate
    in consumer satisfaction surveys (among many other things).
    Formulary Requirements
        The MMA requires CMS to review Part D formularies to ensure that
    beneficiaries have access to a broad range of medically appropriate
    prescription drugs to treat all disease states. CMS relies on stringent
    formulary requirements, overseen through a comprehensive, multi-step
    review process, to help ensure beneficiaries have access to covered
    Part D drugs. Formularies and formulary management practices vary
    across plans, subject to CMS-published guidelines reflecting two
    overarching policy objectives. First, Part D plan sponsors must have
    robust formularies developed and approved in accordance with CMS
    guidance that do not substantially discourage enrollment by or
    discriminate against particular types of beneficiaries. Second, plan
    sponsors are expected to use approaches to drug benefit management that
    are proven and in widespread use in prescription drug benefit
    management outside of Medicare.
        As a condition of participation in Part D, sponsors must submit
    their plan formularies for CMS review and approval. CMS considers
    covered drugs as well as utilization management techniques in reviewing
    plan formularies. If CMS reviewers find that a plan's formulary could
    substantially discourage enrollment by certain types of beneficiaries
    or otherwise violates Part D program requirements, that formulary will
    not be accepted and if unchanged, the plan is not eligible for a Part D
    contract.
        In addition to maintaining robust formularies, Part D plans'
    transition processes must address situations in which a beneficiary
    first presents at a participating pharmacy with a prescription for a
    drug that is not on the formulary, unaware of what drug is covered by
    the plan or of the plan's exception process. Plans must have systems
    capabilities that allow them to provide a one-time, temporary supply of
    non-formulary Part D drugs (including Part D drugs that are on a plan's
    formulary but require prior authorization or step therapy under a
    plan's utilization management rules) in order to accommodate the
    immediate needs of the beneficiary. In general, during the first 90
    days in a plan, Medicare drug plans must provide their enrollees with
    30 days to transition to another drug on the plan's formulary or to
    request a formulary exception. Different rules may apply for people who
    reside in an institution (like a nursing home). An effective transition
    process ensures that new drug plan enrollees will have timely access to
    the drugs they need while allowing the flexibility necessary for plans
    to develop a benefit design that promotes beneficiary choice and
    affordable access to medically necessary drugs. CMS reviews
    attestations of plan sponsors' transition processes as part of the plan
    benefit design review. Plan transition processes must address such
    situations for new enrollees, in addition to situations where enrollees
    are stabilized on formulary drugs that require prior authorization or
    step therapy under a plan's utilization management rules.
        Outside of the transition period, if a beneficiary's physician
    determines that it is medically necessary for the beneficiary to take a
    certain drug, and the beneficiary has already tried similar drugs on
    his/her plan's formulary and they did not work, the beneficiary or the
    physician can contact the plan to request a formulary exception. If the
    request is approved, the plan will cover the drug.
    Coverage Determinations (including Exceptions) and Appeals
        CMS has incorporated substantial enrollee protections in the Part D
    coverage determination and appeals processes, which build on the
    processes used for the Medicare Advantage program and reflect
    additional considerations for prescription drugs. As mentioned above,
    beneficiaries may request a formulary exception. Part D plans must
    grant an exception, consistent with the prescribing physician's
    supporting statement, when it determines that the drug is medically
    necessary because (1) all covered Part D drugs on any tier of a plan's
    formulary would not be as effective for the enrollee as the non-
    formulary drug, and/or would have adverse effects; (2) the number of
    doses available under a dose restriction for the prescription drug has
    been ineffective or is likely to be ineffective or adversely affect
    patient compliance; or (3) the prescription drug alternative(s) listed
    on the formulary or required to be used in accordance with step therapy
    requirements has been ineffective or is likely to be ineffective or
    adversely affect patient compliance, or has caused or is likely to
    cause an adverse reaction or other harm.
        Plans must issue decisions as quickly as an enrollee's health
    status requires. In addition, plans must have procedures to expedite
    these determinations and render decisions within 24 hours. An enrollee,
    their designated representative, or the enrollee's prescribing
    physician may request that a Part D plan expedite a coverage
    determination when the enrollee or his or her physician believes that
    waiting for a decision under the standard timeframe may place the
    enrollee's life, health, or ability to regain maximum function in
    serious jeopardy.
        If an enrollee is dissatisfied with a coverage determination, he or
    she can appeal the decision (including a decision on an exception
    request). The prescribing physician also can ask for an expedited
    first-level appeal (redetermination) on behalf of the enrollee. For
    expedited redeterminations, a Part D plan must give the enrollee (and
    prescribing physician involved, as appropriate) notice of its decision
    as quickly as the enrollee's health status requires, but no later than
    72 hours after receiving the request. Decisions on standard
    redeterminations must be communicated to the enrollee in writing no
    later than 7 days after receiving the request. If a plan issues an
    adverse redetermination, the enrollee will receive a notice that
    includes information on how to request a reconsideration by the Part D
    independent review entity (IRE).
        Plans are required to report data to CMS related to, among other
    things, prior authorization, step edits, formulary exceptions, tiering
    exceptions, and appeals. For example, the number of appeals forwarded
    by a plan to the IRE for consideration due to the plan's inability to
    meet timeframes for coverage determinations and redeterminations are
    collected by CMS and outliers are investigated. CMS also receives
    appeals information directly from the IRE, which is then compared to
    information submitted by the plans for further monitoring.
        CMS has taken a number of steps to make the coverage determination
    and appeals processes more understandable and accessible. For example,
    CMS has developed publications designed for beneficiaries and
    physicians that explain how to request a coverage determination or an
    appeal and model forms that can be used when requesting coverage
    determinations (including requests for prior authorization). CMS also
    developed ``best practice'' standards for plan websites for the
    dissemination of appeals information.
    Oversight of Part D Plans
        Building upon lessons learned and information gathered during 2006,
    CMS has strengthened its oversight of Part D plans. CMS continually
    collects and analyzes performance data submitted by Part D plans,
    internal systems, and beneficiaries. CMS has established baseline
    measures for the performance data and has been tracking results over
    time. Plans not meeting the baseline measures are contacted by CMS and
    compliance actions are initiated. Actions range from warning letters
    all the way through civil monetary penalties and removal from the
    program, depending on the extent to which plans have violated Part D
    program requirements. All violations are taken very seriously by CMS,
    with beneficiary protection the foremost concern.
        Compliance audits are another key approach to Part D plan
    oversight. CMS is working to improve its methods for identifying
    companies for compliance audits, making more efficient use of the
    resources available for ensuring compliance. For example, we have
    developed a contractor risk assessment methodology that informs the
    audit process by identifying organizations and program areas that
    represent the greatest compliance risks to Medicare beneficiaries and
    the government. CMS can then direct audit resources to those high risk
    contracts. While receipt and analysis of data is central to this
    oversight strategy, regularly scheduled and focused/targeted program
    compliance and program integrity audits remain necessary to ensure
    program compliance and document the Agency's program oversight
    responsibilities. Based on enhanced knowledge of the program--what is
    working well and what areas need to be strengthened--CMS is revising
    the risk assessment methodology to better equip us to focus our
    oversight resources on the most problematic plans. We anticipate the
    revised risk assessment tool will be ready for implementation and use
    in January 2008.
        Currently, CMS is aware that there are significant concerns about
    the marketing practices of some plans. We are extremely concerned about
    reports of marketing schemes designed to confuse, mislead or defraud
    beneficiaries, and are taking vigorous action to address violations.
    CMS enforcement responses to marketing violations may range from
    issuing a warning letter to requesting a corrective action plan to
    imposing civil monetary penalties or ultimately terminating a plan
    sponsor's contract. CMS also takes steps to ensure that beneficiaries
    are protected. Any beneficiary who believes he or she was enrolled in a
    plan without his or her consent may contact the plan, 1-800-MEDICARE,
    or a CMS Regional Office for assistance in disenrolling from the plan
    and selecting another Part D plan if desired. CMS has caseworkers in
    all Regional Offices and in our Central Office available to assist
    beneficiaries in resolving such issues, and has recently updated its
    protocols to ensure that caseworkers understand how to handle these
    requests expeditiously.
        Further, CMS is now working with a contractor to augment the
    internal agency resources available for Part D compliance audits. Among
    other things, the contractor is conducting ``secret shopping'' at
    marketing events across the country; such information enables CMS to
    learn firsthand what is happening in the sales marketplace and to
    identify organizations for compliance intervention that are not meeting
    CMS marketing and enrollment requirements.
        CMS also has strengthened relationships with State regulators that
    oversee the market conduct of health insurers. Specifically, CMS worked
    cooperatively with the National Association of Insurance Commissioners
    (NAIC) and State Departments of Insurance to develop a model Compliance
    and Enforcement memorandum of Understanding (MOU). This MOU enables CMS
    and State Departments of Insurance to freely share compliance and
    enforcement information, to better oversee the operations and market
    conduct of companies we jointly regulate and to facilitate the sharing
    of specific information about marketing agent conduct.
    Conclusion
        CMS continues to make significant progress in overseeing and
    promoting quality Part D prescription drug coverage. With ongoing
    effort and vigilance, I am confident we will see continued high levels
    of plan compliance with program requirements, along with significant
    improvements where necessary on this critical front. Thank you again
    for the opportunity to speak with you today. I look forward to
    answering your questions.

        Chairman STARK. Ms. King.

    STATEMENT OF KATHLEEN M. KING, DIRECTOR, MEDICARE PAYMENT, U.S.
                    GOVERNMENT ACCOUNTABILITY OFFICE

        Ms. KING. Mr. Chairman, Mr. Camp and Members of the
    Committee, thank you for inviting me to speak with you today. I
    am here to talk to you about a recently issued GAO report on
    challenges in enrolling new dual-eligible beneficiaries into
    Medicare Part D. As you know, the Medicare Modernization Act
    switched the drug coverage of Medicare beneficiaries and dual-
    eligible beneficiaries into Medicare effective January 1, 2006;
    and we were asked to take a look at that enrollment process.
        My remarks today are going to focus on two aspects of that
    report. The first is CMS's process for enrolling dual-eligible
    beneficiaries into Part D plans and CMS's implementation of the
    retroactive coverage policy.
        The dual-eligible beneficiaries are, as you know, more
    vulnerable than other Medicare beneficiaries. They are poorer,
    they have more extensive healthcare needs than other
    beneficiaries, they have higher rates of cognitive impairment
    and disability.
        There are two different groups of dual-eligible
    beneficiaries, and if you will bear with me on this. About one-
    third of them are going from Medicaid to Medicare, that is,
    they are becoming Medicare eligible by virtue of turning 65 or
    exhausting their 2-year waiting period due to disability. Two-
    thirds of them are going from Medicare to Medicaid, and they
    are doing so because they have a loss in income and resources.
    So, they have Medicare first and then they become Medicaid.
        I have brought you a complicated chart, which is up on your
    screens; and I am not going to walk you through every part of
    that. But I just show it to you so that you understand how
    complicated the enrollment process is. There are multiple
    partners involved in it, including SSA, the State, CMS and
    prescription drug plans; and data exchanges flow back and forth
    across them, as you can see on your chart. This enrollment
    process has different effects on the one-third group and the
    two-thirds group.
        In our work, we found that it takes about a minimum of 5
    weeks for the enrollment process to be completed because of its
    complexity. CMS had to piece together existing data systems not
    used to operating in real time in order to do this. So, the
    enrollment process initially has an effect different on the
    one-third group and the two-thirds group.
        For the one-third who are going from Medicaid to Medicare,
    their eligibility deate can be anticipated because CMS and SSA
    knows when they are going to turn 65 or when their waiting
    period is up. During 2006 CMS they devised a process to do
    prospective enrollment for these beneficiaries so they could
    bypass a lot of the difficulties experienced during the 5-week
    waiting period.
        But for the two-thirds who are going from Medicare to
    Medicaid it is not possible to enroll them at this point
    prospectively. They may be likely to encounter difficulties in
    getting their prescription drugs at the pharmacy counter before
    the enrollment process has not been completed.
        I want to show you--I will just flip to this other chart--
    the length of time that elapses and what the processes are in
    completing that enrollment. That is just for purposes of
    illustration.
        Next, I want to turn to the retroactive coverage policy
    that CMS implemented with regard to dual-eligibles. CMS has
    determined that eligibility for Part D should go back to the
    first day of Medicaid eligibility. So, the enrollment process
    takes 5 weeks, and generally the Medicaid eligibility is
    retroactive several months. So, there is about a 5-month period
    in which beneficiaries are eligible for Medicare Part D, but
    don't have their membership information. During this period the
    plans are being paid for providing these benefits.
        But last year CMS did not know how many beneficiaries were
    claiming reimbursement for retroactive coverage and did not
    inform beneficiaries of their right to be reimbursed for
    previous drug purchases. We think it is unlikely that
    beneficiaries would have saved their receipts if they didn't
    know until later that they were eligible for Part D.
        During this period retroactive coverage, CMS paid about
    $100 million to the plan for providing benefits; and we don't
    know how many people actually filed claims for reimbursements
    during that time.
        I also wanted to point out to you that we have some other
    ongoing work t looking at formulary coverage determinations and
    appeals; the plan fraud, waste and abuse plans; and complaints
    about to Part D that have been filed both to CMS and to the
    plans themselves. We expect to be able to report on these
    issues by the end of the year.
        Mr. Chairman, that concludes my prepared statement.
        Chairman STARK. Filed by the end of the year you said.
        Ms. KING. Yes.
        That concludes my prepared statement. I would be happy to
    answer any questions. Thank you.
        [The prepared statement of Ms. King:]

        Statement of Kathleen M. King, Director, Medicare Payment, U.S.
                        Government Accountability Office

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        Chairman STARK. Thank you both. It is my understanding we
    will be having some votes in a few minutes, but let us see if
    we can start with some of our questions.
        I am curious, Ms. Norwalk. Can you tell me how many plans
    have been subject to sanctions?
        Ms. NORWALK. If you are talking about intermediate
    sanctions, including civil monetary penalties, there have been
    nine civil monetary penalties assessed against prescription
    drug plans in 2007 and 69 against Medicare Advantage Plans in
    2006 and 2007. Then, of course, the seven recently announced
    private fee-for-service and marketing suspensions that were
    voluntary.
        Chairman STARK. Do those suspensions that you mentioned
    that were voluntary, did those include the drug plans?
        Ms. NORWALK. Those are just the seven private fee-for-
    service plans. That was the most recent action.
        Chairman STARK. But for those seven I believe some of them
    offer Part D programs. Did they agree to suspend marketing Part
    D as well as their Medicare Advantage?
        Ms. NORWALK. It is mainly just private fee-for-service. Of
    course, because that is the one plan type at the moment that is
    currently allowed to have open enrollment, where the other
    plans you would only enroll in them if you are aging in or
    coming into the program because of a disability. So,
    essentially, the other plans aren't marketing right now.
        Chairman STARK. In 2007 and in 2006, there were 69. So,
    give or take 75 sanctions in the last year and a half.
        Ms. NORWALK. Correct. Those are civil monetary penalties,
    as opposed to other sanctions, for example, corrective action
    plans and those things that we may have required of the plans.
        Chairman STARK. How many more sanctions were there of other
    types?
        Ms. NORWALK. My count is somewhere in the neighborhood of
    about 70 corrective action plans for different organizations
    for different sorts of issues. There are other things that we
    may have done as well, and I don't have the numbers. But
    warning letters we suppress, information on the drug plan or
    other Web sites if we don't have accurate formulary data, for
    example. So, those are things that we may do. It really depends
    on your definition of what a sanction is or that may not rise
    to the level of something as severe as a civil monetary
    penalty.
        Chairman STARK. I would hardly call a sanction letting
    these guys cop a plea and get a voluntary stop marketing when
    some of them probably should have gone to jail or paid criminal
    fines. It hardly seems to me that we are punishing those
    private fee-for-service plans.
        As I recall the letters that we sent outlining the
    egregious marketing violations--I wish our former insurance
    commissioner was here--but I am sure that had State insurance
    commissioners been able to weigh in on this they would have
    probably filed some criminal penalties.
        Ms. NORWALK. I am not actually limiting our response to
    that particular voluntary agreement.
        Chairman STARK. I am just suggesting that that voluntary
    agreement was egregious.
        Ms. NORWALK. There are a number of benefits to having done
    it that way, if I may, Mr. Chairman. One of them is, typically,
    there are a number of weeks of appeal processes and the like;
    and given what we have been hearing, getting the plans to agree
    to stop their marketing immediately would allow us to delve
    deeper into the issues that arise so that we could resolve
    them. If there are further sanctions that are warranted and we
    have issues of fraud, we refer it to law enforcement and the
    like; and there may well be other activities just depending on
    what it is that we find. But we thought the most important
    thing to do would be to stop the marketing to make sure that we
    can protect beneficiaries.
        Chairman STARK. So, they weren't just copping a plea. You
    just got them to hold while you investigate them further.
        Ms. NORWALK. There may be some issues that do require
    further investigation. It is my hope that we may not have to,
    but I can assure you if we have instances of fraud or any other
    things that we will do the other appropriate actions.
        But they do take longer. Civil monetary penalties, for
    example, need to be done through the Justice Department and the
    like, and the processes are longer internally. So, we thought
    this was a good first step.
        Chairman STARK. Let me run through, if I may, a series of
    issues that we might be able to consider in legislation this
    year largely because they wouldn't cost a lot of money and
    therefore we might get them past the PAYGO issue. If you could
    just respond to the extent that CMS would favor, object or have
    no position on these. It would be helpful if we can get into it
    later, but I thought I would just run through these.
        In the State oversight or Part D plans, the current law
    prohibits States from regulating marketing activities of the
    sponsors. Would you have a position on our changing the statute
    so that States could enforce marketing guidelines on the plan?
        Ms. NORWALK. CMS would object to that. We are happy to work
    with the States. We, in fact, have a MOU. I think 26 States
    have signed the MOU. I think it is important that we work
    together. But to have a national benefit we need to have a
    single standard, and I think CMS is the appropriate enforcer of
    that particular standard. But appreciating that much of the
    marketing is actually done through agents and brokers that are
    in fact State regulated, and there are not only law enforcement
    officials that are State, there are also Federal, I think it is
    critical that we have all of those together.
        Chairman STARK. You object. I will let Mr. Pomeroy explain
    to you the problems of the regulation as a State commissioner.
        There are six therapeutic classes now in which you require
    coverage. Would you object to our codifying this in
    legislation?
        Ms. NORWALK. Obviously, we feel those six classes are
    important beneficiary protections. One of the detriments of
    codifying it may be the further inability of plans to negotiate
    the prices on those drugs within those classes. So, it really
    depends both on what the score might be as well as how it is
    drafted. Obviously, we feel it is important enough that we have
    done it on an administrative basis.
        I also think that doing it on an administrative basis
    allows us, as the science continues to change, it may be that
    all or substantially all drugs with any one of those classes
    may not be necessary in the future, just depending on the state
    of pharmaceutical improvements.
        Chairman STARK. Excuse my pronunciation here, but we have
    had a number of requests from the mental health community that
    cover benzodiazepines.
        Ms. NORWALK. Benzodiazepines, uh-huh?
        Chairman STARK. If we eliminate their exclusion would you
    object? Support that? No position?
        Ms. NORWALK. I am not sure I have a position. I would like
    to go back and talk to the experts internally.
        Chairman STARK. Okay. One of the concerns that I have and
    that has been raised, and if you don't understand the reasons
    for it I will go into it further, but Part D beneficiaries can
    only join, as I understand it, from November 15 through
    December 31. However, Advantage Plans have an open enrollment
    through March 31. This has the effect of giving Medicare
    Advantage Plans an added benefit. Because if people missed the
    December 31, the only place they can possibly get a drug
    benefit is in Medicare Advantage.
        Would you object to making the Medicare Advantage and the
    Part D open enrollment periods both run through the same period
    of time? I would prefer March 31.
        Ms. NORWALK. I do want to clarify one thing. I am fairly
    certain--and I have to check the regs--but I am fairly certain
    that one of the things we did in implementing those regulations
    is that you cannot get a drug benefit if you have not signed up
    for one within the November 15 through December 31 timeframe.
    Meaning that while you can sign up for a Medicare Advantage
    Plan through March 31, you cannot sign up for one with a drug
    benefit unless you were already in one and were switching to a
    Medicare Advantage Plan with a drug benefit.
        Chairman STARK. The question is, can you switch from one
    Part D to the other?
        Ms. NORWALK. You could switch from a Part D plan to a
    Medicare plan with drug coverage, but you cannot switch from no
    drug plan to a plan with drug coverage. Either you have it or
    you don't have it in either case.
        Chairman STARK. But if you could only join a Part D plan
    through the 31st, can you switch from one Part D plan to the
    other after the 31st of December?
        Ms. NORWALK. No, you cannot switch from a stand-alone drug
    plan after December 31.
        Chairman STARK. To a different stand-alone drug plan?
        Ms. NORWALK. To a different stand-alone drug plan.
        Chairman STARK. But you could switch after December 31 from
    a stand-alone drug plan to a Medicare.
        Ms. NORWALK. But only one with drugs, that is correct.
        Chairman STARK. Would you object to our making those so
    there is an advantage one way or the other?
        Ms. NORWALK. I don't think so. I would like to ask the
    actuaries if there is an economic impact.
        The second piece of that is just the administrative issues
    that we already have with switching plans during the plan year
    with the drug benefit. As I noted in my oral statement, part of
    the issues we have right now relate to plan switching
    particularly in 2006 after December 31 so that there are
    considerable administrative burdens. If we could clean those up
    administratively, I would have less of an issue.
        Chairman STARK. If we could do that, too, I would share
    that with you. But it would also make it somewhat easier, it
    seems to me it, to level the marketing playingfield as well as
    make it somewhat simpler for the beneficiaries.
        Finally, to turn to transparency, would you object to our
    requiring public disclosure of sanctions taken against plan
    sponsors so that people signing up would have some idea of the
    standards that these plans met?
        Ms. NORWALK. We actually are going to go ahead and do that.
    It will be a part of our consumer report that we put out on the
    plans next year. We have had significant numbers of inquiries
    around corrective action plans generally, and we are currently
    working on a way to make them easily understood so that we do
    put at least some summary information up on our Web site so
    that the public can have access.
        Chairman STARK. So, we are in a lock-set on that one.
        Mr. Camp.
        Mr. CAMP. Thank you Mr. Chairman.
        I just want to clarify a little bit about what we heard
    about the dual-eligibles. How many total dual-eligibles are
    there? Or if I said that CMS enrolled about five and a half
    million in 2005----
        Ms. NORWALK. You would be right.
        Mr. CAMP. I understand, Ms. King, your testimony was about
    the new dual-eligibles?
        Ms. KING. Yes. There are about 634,000 of them.
        Mr. CAMP. Then your testimony that a third of those which
    were in Medicare and for usually financial reasons find
    themselves on Medicaid, a third of those represent a third of
    that 634,000?
        Ms. KING. Yes.
        Mr. CAMP. Your testimony then, the two-thirds, that is two-
    thirds of that 634,000?
        Ms. KING. Yes.
        Mr. CAMP. Of those, what percentage did not have a plan?
    Are you aware of?
        Ms. KING. Let me be sure I understand your question.
        Mr. CAMP. Of the new dual-eligibles, the two-thirds that
    you testified to in your testimony, how many of those--what
    percentage of total dual-eligibles did not have a plan?
        Ms. KING. Prior to? I'm sorry. I don't know the answer to
    that.
        Ms. NORWALK. Obviously, no one had a plan in 2005. In 2006,
    we auto-enrolled everybody. Unless there were glitches between
    the computer systems, we enrolled them as soon as we found
    them. So, I suspect that, ultimately, none.
        Mr. CAMP. Ms. Norwalk, I know a lot of work has been done
    on improving the enrollment process, and I sort of wanted to
    highlight what number of folks we are talking about. But tell
    me, I know from your written testimony some of the details of
    your efforts there to improve the enrollment process from 2006
    to 2007. Can you describe how these efforts may or may not have
    helped and is there any data showing fewer complaints or
    shorter wait times, if you have any of that to share with us?
        Ms. NORWALK. I think, just generally, the entire process,
    if you compare 2006 to 2007, was a significant improvement, not
    surprisingly, given the number of people that we had in the
    plan already and the relatively few numbers that switched
    between 1 year to the next. So, I think generally we did
    better, just because of the much easier, much more compressed
    timeframes; and beneficiaries had an opportunity the year
    before to take a look at data, et cetera.
        Mr. CAMP. As a matter of fact, I think more than half of
    the enrollees renewed their 2006 drug coverage without it
    making a change on their 2007. So, it would seem to me that
    they made the proper choice from their standpoint.
        Ms. NORWALK. Correct. Given the satisfaction ratings that
    we have seen, 80 percent are satisfied with their coverage. We
    would like to get the 20 percent satisfied, too, of course, but
    we are certainly moving in that direction.
        We have heard very little from pharmacies this year as
    well. Last year, a lot of those complaints came in from
    pharmacies. So, I think certainly the total evidence looks very
    good as well, the survey result.
        Mr. CAMP. How are beneficiaries protected from midyear
    formulary changes?
        Ms. NORWALK. Formulary changes do happen on occasion.
        The first point is that all of them are reviewed by CMS for
    approval. Midyear, the first thing we do is we grandfather
    anyone who is on a particular drug where a plan might have a
    formulary change. The first and most important thing is that if
    you are on that drug you can stay on that drug in the plan. The
    sorts of things that we might do from a formulary change that
    we would approve are likely to be generics coming into market,
    a black box warning or some other safety concern that the FDA
    has put out. Those types of things we would do. Most changes,
    in fact, we do not permit to happen midyear. So, maybe from a
    formulary change on the positive side we would also allow
    formularies to add drugs or plans to add drugs to their
    formularies as they go forward. Particularly as new drugs come
    to market, we think that is awfully important.
        Mr. CAMP. Can you talk a little bit about the appeals
    process and what steps CMS might have in place to notify
    beneficiaries of their appeal rights?
        Ms. NORWALK. You have raised a pretty good question.
        What I did is I went to staff and asked exactly what we do.
    One of the things we do, we have a standard form that plans
    require the pharmacist to hand out or at least have available
    where they can see it if they don't actually have a hard copy.
        Specifically, what happens at the pharmacy counter if a
    prescription drug isn't received and written right, they have
    to have an explanation and so forth. So, here's the OMB
    approved form, a single page that the pharmacy hands out. As
    you noted in your testimony, Mr. Camp, we have the Medicare
    appeal rights and Medicare and You Handbook.
        Chairman STARK. Could you yield at that point?
        Mr. CAMP. Yes, I would be happy to.
        Chairman STARK. Are you talking about I think the same
    thing I have here?
        Ms. NORWALK. Yes.
        Chairman STARK. What I am finding, and you raised the
    question about 11 pages, I think. All I see here is it says if
    you have a Medicare Advantage Plan or a Medicare prescription
    drug plan, look at your plan materials to learn how to file an
    appeal or go--am I missing something?
        Mr. CAMP. I think you have the 2006. The 2007 handbook has
    the 11 pages.
        Chairman STARK. I have the 2008 handbook.
        Ms. NORWALK. You are ahead of us.
        Mr. CAMP. At least I know in the 2007 handbook there is no
    page. I haven't seen 2008 yet.
        Ms. NORWALK. We do require the plans to send an evidence of
    coverage to every beneficiary. One of the other things that we
    are doing both this year and we do every year is to have a
    standard evidence of coverage. Plans are required to include
    very specific information about their appeals process.
    Obviously, the appeals process in the Medicare and You Handbook
    does need to be more general, because reaching every individual
    plan doesn't make sense to have in the handbook. So, they would
    need to refer to some of the plan guidance.
        The other things that we do--we also have it on our Web
    site. We have tip sheets for our partners that talk exactly
    about how to file a complaint and so forth, also good for them
    to handout to beneficiaries. That is very specific about
    getting the drugs that they need.
        So, we really have tried to reach them in every possible
    way, through communications that we send, communications the
    plans send, through what they get at the pharmacy level, et
    cetera. So, we do require all of these communications to occur
    regarding an appeal if a beneficiary can't get a particular
    drug.
        Chairman STARK. If the gentleman from Michigan would yield?
        Mr. CAMP. I would be happy to yield.
        Chairman STARK. How many appeals in a year to the nearest
    hundred thousand or whatever?
        Ms. NORWALK. All I can tell you currently--and I will see
    if we can get some information specifically from the plans in
    terms of their numbers. I do have a sense of how many numbers
    that appeal to the second level, that redetermination level to
    MAXIMUS, our independent review entity. They see about a
    thousand a month on average, sometimes more, sometimes less in
    terms of appeals. Some of them are overturned. Some of them are
    upheld. It just depends on the issue.
        Chairman STARK. It just seems to me that I think if we had
    to concentrate any efforts to either simplify or unify the
    procedures, to say, look, once somebody is appealing, most
    often they could be the most sick or not have a drug they need
    or that their doctor thinks they need; and I would just like to
    join with either you, Ms. Norwalk, or Mr. Camp. Anything we
    could do to make that process quicker? I don't think we would
    lose any money.
        Ms. NORWALK. We do have some of the fastest turn-around
    times in any insurance industry in terms of appeals. I think it
    is better than the self-employed benefits program, and it is
    better than typically what you see in the commercial market.
    So, we really feel that that is important.
        We do have other sorts of safeguards. For example, once a
    drug has been prior authorized you should not have to have it
    prior authorized again and so forth. We have a special hotline
    for pharmacies to call. They can call us. The plans have
    special pharmacy hotlines as well. So, we really have tried
    with our own administrative mechanisms to do as much as we can
    to make it as easy as possible on the beneficiary.
        Mr. CAMP. I think the language I am looking in this 2007
    book is very much plain English.
        If you have Medicare, you have certain guaranteed rights.
    One of these is the right to a fair process to appeal decisions
    about healthcare payments or services. No matter what kind of
    Medicare plan you have, you may have the right to appeal these
    decisions. You may appeal if--and there is bullet points. So, I
    hope that plain language that I see in the 2007 book isn't
    changed significantly for the 2008 book, and that is where we
    might be able to work together.
        Ms. NORWALK. Absolutely. You and your staff, Mr. Camp,
    should have that. As you can see, Chairman Stark has a copy
    here. So, we have given it to the Committee for review. It is
    in its final stages, so we look forward to hearing your
    comments. It has been through one round on the Hill already.
        Mr. CAMP. Thank you, Mr. Chairman.
        Chairman STARK. We have a couple of minutes. Unfortunately,
    it is going to be a half hour process. I wonder if I could ask
    the witnesses, offer you a cup of coffee, if you wouldn't mind
    sticking around until we get back. Because I know other Members
    would like to inquire.
        Ms. NORWALK. Of course.
        Chairman STARK. Thanks so much.
        We will stand in recess subject to the call of the chair.
        [Recess.]

    RPTS STRICKLAND

    DCMN MAGMER
    [3:25 p.m.]

        Chairman STARK. I thank our witnesses for their patience,
    and I would like to see if Mr. Doggett would like to inquire.
        Mr. DOGGETT. Yes, Mr. Chairman.
        Thank you, for your testimony, Ms. King. Thank you for this
    particular report and for all of the important work that the
    GAO does to attempt to assure a little bit of accountability
    for the taxpayers' dollars.
        I found your report to be very alarming. As I understand
    your findings, the Bush Administration paid out $100 million to
    insurance companies and other sponsors of these plans and does
    not know whether they got anything for it.
        Ms. KING. That is correct.
        Mr. DOGGETT. Yes. So, often here, usually at campaign time,
    I hear about waste, fraud and abuse of the government; and yet
    the ability of this Administration to throw money at problems
    as long as their friends catch it never ceases to appall me.
        With reference to this 100 million which was your estimate
    of the amount of money that CMS paid out for 2006, CMS does not
    dispute your amount of $100 million paid out.
        Ms. KING. That is correct.
        Mr. DOGGETT. CMS could not give you any information to
    indicate that they got anything for the $100 million.
        Ms. KING. We recommended to CMS that they start tracking
    their beneficiaries who were in retroactive coverage periods
    and start tracking the dollars paid out during that time, and
    they agreed to do that going forward.
        Mr. DOGGETT. Going forward. So, forget about the first $100
    million that may have been wasted, but they will at least have
    a modicum of accountability for the future.
        As to the past $100 million that they shelled out, that
    $100 million was alleged to assure prescription drug coverage
    for some of the poorest people in this country. If I understand
    correctly, they did not know they were entitled to coverage at
    the time the $100 million went out. The beneficiaries, they had
    not been notified.
        Ms. KING. That is a function of two things. One is the
    length of time of the enrollment processing period, which is
    about 5 weeks; and then the other part of it is the decision to
    make coverage retroactive to the first date of Medicaid
    eligibility, which is 3 months--generally, 3 months prior to
    their Medicaid application.
        Mr. DOGGETT. Well, did you find out after paying out the
    $100 million--surely the Bush Administration notified these
    poor people to save their receipts, and if they managed to buy
    their prescriptions instead of buying their groceries to save
    that receipt and turn in so they could gets reimbursed. Did
    that happen?
        Ms. KING. In March of 2007 CMS did send out a letter to
    beneficiaries----
        Mr. DOGGETT. March of 2007?
        Ms. KING. Yes.
        Mr. DOGGETT. Was that about the future or did that tell
    them about a year after they may have incurred that receipt
    that they needed to keep their receipts and turn them in and
    get reimbursed?
        Ms. KING. I believe that March 2007 was the first time.
        Mr. DOGGETT. Again, the poor people who made these payments
    were not told that they had any rights to get reimbursed out of
    the $100 million the Bush Administration paid out.
        How about the community pharmacists? Because I know many of
    these poor people go to a community pharmacy to get their
    benefits. This was occurring at the same time that there were
    multiple complaints from community pharmacists that they were
    not being properly paid by the same companies that got the $100
    million, wasn't it?
        Ms. KING. I am afraid I can't answer that question because
    the community pharmacy thing was not part of the scope of our
    study.
        Mr. DOGGETT. I understand. Well, thank you for the study
    you did. It is an amazing finding. But--as part of the overall
    problem of throwing money in the wrong direction and not
    according the protection that people have.
        Ms. NORWALK. May I have an opportunity to respond, Mr.
    Doggett?
        Mr. DOGGETT. I have a quite a few questions for you as
    well. If my time permits.
        As you know, we have had requests outstanding since the
    last time you were here to determine whether CMS had any
    specific objections to the extra help legislation that I have
    introduced. We still don't have an answer. Do you have it
    today?
        Ms. NORWALK. It depends on the specific piece of that. I
    know that we are working with the IRS and the Social Security
    Administration to get back to those specifics.
        Mr. DOGGETT. Each specific piece that I have been asking
    for responses, responsive responses for months that I have been
    unable to get from you. Do you have those answers?
        Ms. NORWALK. I don't have them with me, but I will be sure
    to get them.
        Mr. DOGGETT. Do you have any updated information on how
    many people who are eligible for extra help have not received
    it?
        Ms. NORWALK. We anticipate in terms of specifics just over
    3 million.
        Mr. DOGGETT. You don't dispute the estimate that the folks
    at GAO made of about $100 million paid out?
        Ms. NORWALK. I actually would like to go through a little
    more detail----
        Mr. DOGGETT. I would like to get answers to my questions
    first.
        Ms. NORWALK. I do think the $100 million is accurate in
    terms of fees paid to plans.
        Mr. DOGGETT. Did you track to see what, if any, benefits
    were paid out of that $100 million?
        Ms. NORWALK. It is part of the process that we will be
    doing with enrollment and premium reconciliation for 2006 that
    is ongoing currently. So, we will be tracking that. That is
    correct, yes.
        Mr. DOGGETT. So, when do you expect to be able to tell us
    what we got for the $100 million payment?
        Ms. NORWALK. There are three different reconciliation
    processes ongoing. We should have them completed by the fall.
        Mr. DOGGETT. You will be able to tell us then precisely by
    plan out of that $100 million you paid out precisely how much
    in benefits they paid out?
        Ms. NORWALK. As long as we can figure out the time in which
    the retroactive nature occurs. Because, as Ms. King pointed
    out, you enroll in the benefit in August, but you are
    retroactive. As long as we can figure out from the State
    perspective--I am not sure our systems or the plan systems
    allow us to do that. But if they do, we would be able to have
    some basic information. In terms of the specifics, I am not
    sure.
        But I will point out that we have spent a lot of time--and
    I would like to correct Ms. King. I actually have information
    we gave to beneficiaries in particular to our plan partners and
    the SHIPs, the State Health Insurance Programs, that
    specifically state please save your receipts. We did this in
    December, 2005; we reissued it in 2006; and we continue to do
    it. We do think it is important.
        I am happy to report that the States and their Medicaid
    forms also say save your receipts, so we do encourage that----
        Mr. DOGGETT. You expect that there will be some payments
    that were made out of that $100 million?
        Ms. NORWALK. Oh, absolutely. And----
        Mr. DOGGETT. When it is that you think you will have that
    by plan?
        Ms. NORWALK. It depends on our enrollment processes and our
    reconciliation. I am hopeful that it will be later this fall.
    But it really depends on the computer processes. So, as long as
    they go well.
        Mr. DOGGETT. Do you expect that information will show that
    most of that $100 million was paid out in benefits or kept by
    the insurance companies?
        Ms. NORWALK. You will recall those are premium payments. In
    terms of specifics, I have no idea how much the beneficiaries
    will have saved their receipts. It is similar to Medicaid
    because in the Medicaid program with retroactive enrollment you
    save your receipts and submit them. I suspect it would be
    similar to what you see on the Medicaid side.
        Mr. DOGGETT. Which would be about what?
        Ms. NORWALK. I don't know, but I will see if I can find out
    for you.
        Mr. DOGGETT. Thank you very much.
        Thank you, Mr. Chairman.
        Chairman STARK. Mr. Johnson would you like to inquire.
        Mr. JOHNSON. Thank you, Mr. Chairman.
        Ms. Norwalk, isn't it true that Medicare and the handbook
    which CMS annually sends to every Medicare beneficiary contains
    several pages of information specifically addressing
    beneficiaries?
        Ms. NORWALK. Of course.
        Mr. JOHNSON. Doesn't it also include information on how to
    file an appeal and phone numbers of who to call to file a
    complaint?
        Ms. NORWALK. It does.
        Mr. JOHNSON. So, what other steps do you take to notify
    beneficiaries to make sure they understand what their rights
    are?
        Ms. NORWALK. I think one of the most important things is
    what happens at the pharmacy counter, so beneficiaries have
    this information at their home on a regular basis. I don't
    know, some may look at it--their Medicare handbook may be well-
    worn and others may simply collect dust. I am not sure. But it
    is still important when you go to the pharmacy that you would
    have information. So, we have required the plans to tell the
    pharmacies to hand this out to beneficiaries or at least make
    available the right so if a beneficiary is denied a
    prescription at the counter he or she will know how to get an
    appeal.
        We also have lots of information that we put on the--both
    on our Web site and give to our partners so that they can help
    beneficiaries, as often they do, with an appeal. So, we have
    very specific information as to all the steps that they take.
        In the Evidence of Coverage, which is the brochure that the
    plan sends to each beneficiary, they are required to have also
    the very specific steps at each plan that they take that are
    individual to that plan, the numbers that they call for the
    plan and likewise.
        One more thing, if I might add, which I did not get to. In
    2007, we do collect from the prescription drug plans their
    appeal rates within the plan. So, we will have some information
    around first quarter internal plan appeals in fairly short
    order. I think those plan numbers have come in, and we are
    taking a look and scrubbing them and making sure that they are
    comparing apples-to-apples.
        Mr. JOHNSON. Well, I understand that more than half of the
    Part D enrollees renewed their drug coverage when making their
    2007 plan choice. Can you talk about some of the beneficiary
    surveys that CMS conducted showing that seniors might be
    smarter than some groups give them credit for?
        Ms. NORWALK. Medicare beneficiaries are incredibly smart,
    and I know that for a number of reasons. The first way I know
    is, from the beginning of the benefit, the amount of generic
    prescriptions that are currently prescribed for Medicare
    beneficiaries has risen every single quarter, depending on the
    plan type. Almost 62, 63 percent, in fact, Medicare Advantage
    plans 68 percent. They are very smart shoppers.
        Likewise, we know that they use our comparison tools and
    work with the partners to make sure that they have been
    enrolled in the right plan, and the surveys that we have done,
    not only--not just CMS but independent surveys, including the
    Kaiser Family Foundation--do focus on how happy beneficiaries
    are with their plan coverage and what steps they have taken to
    enroll to be sure they have chosen the right plan. We would
    like everyone to be 100 percent happy, but for the second year
    of a program, 80 percent approval ratings, we are very pleased.
    Thank you.
        Mr. JOHNSON. I think seniors are saving money, and more
    drugs are available for them, and they cost a lot less than
    what they thought.
        Ms. NORWALK. Well, we are pleased both with the cost
    figures as well as the satisfaction figures; and we anticipate
    that they probably are related, that they are paying less than
    they initially anticipated that they would be paying.
        Mr. JOHNSON. They are. Thank you very much.
        Thank you, Mr. Chairman.
        Chairman STARK. Just out of curiosity, before I recognize
    Mr. Thompson, do we know of the 26 million enrollees--whatever
    it is.
        Ms. NORWALK. Twenty-four, I think.
        Chairman STARK. Twenty-four million. Do we know how many of
    those people out of the 24 million did not file any claims at
    all?
        Ms. NORWALK. I don't know. I suspect that is something that
    we could figure out when we go through the reconciliation
    process for 2006 as we determine----
        Chairman STARK. Somebody is nodding their head behind you.
    Do you know? Do you have a guess?
        Ms. NORWALK. We will know.
        Chairman STARK. Half?
        Ms. NORWALK. I would be very surprised if it is anywhere
    close to half. I suspect it is a much smaller percentage.
        Medicare beneficiaries typically take a fairly large number
    of prescriptions. We should have some idea once we go through
    this reconciliation process in terms of how we would pay the
    reinsurance for last year. So, we will know significantly more
    once that process finishes in the fall.
        Chairman STARK. I am not talking about appeals.
        Ms. NORWALK. No, no, I am not talking about appeals either.
        Chairman STARK. Might just have the insurance and not be
    sick enough to need it.
        Ms. NORWALK. I am not talking about appeals.
        One of the things we do from a reconciliation basis in
    order for us to pay reinsurance for the catastrophic coverage
    where we pay plans 80 percent of that cost, we will have
    significantly more information as we go through that, but it is
    a process that we are currently undertaking with the plans once
    we finish a few other computer runs.
        Chairman STARK. I apologize for intruding on your time.
        Mr. Thompson, if you would like to inquire.
        Mr. THOMPSON. It was on my time?
        Thank you, Mr. Chairman.
        Ms. Norwalk, does CMS plan to increase the level of funding
    provided to the SHIPs?
        Ms. NORWALK. We did increase it this year 5 percent.
        Mr. THOMPSON. Giving them an additional 5 percent?
        Ms. Norwalk, you obviously believe they are doing a good
    job.
        Ms. NORWALK. I think they are wonderful partners. I am
    grateful for their help.
        Mr. THOMPSON. Is 5 percent going to be enough?
        Ms. NORWALK. I am sure that all of us could use more money.
    The more money we have the better----
        Mr. THOMPSON. In your professional opinion, is 5 percent
    going to be enough for them to do the counseling that they
    need?
        Ms. NORWALK. I do think it is sufficient. I am certainly
    glad that we could give them an increase in their spending.
        Mr. THOMPSON. If you felt they needed more, would CMS
    support increased appropriation for SHIP outreach?
        Ms. NORWALK. I would not complain.
        Mr. THOMPSON. I want to go back to something that the
    Chairman started his questioning with earlier today when he was
    talking about the intermediate sanctions and asked you about
    specific numbers. Are you guys taking actions against other
    plans if problems don't rise to the level of intermediate
    sanctions?
        Ms. NORWALK. Absolutely.
        Mr. THOMPSON. What are they? You talk about compliance
    actions.
        Ms. NORWALK. Right, corrective action plans. If we find a
    particular issue with a plan through any number of mechanisms,
    particularly if it is a systemic issue, we will ask the plan to
    tell us how they will correct that. If we have issues that
    continue over time, then the level of sanction may continue to
    something more egregious. Or if the issue is more egregious,
    then they might have something beyond a corrective action plan
    like a civil monetary penalty.
        Mr. THOMPSON. Who determines what is egregious? The law
    does not talk about compliance actions, as I recall.
        Ms. NORWALK. I am not sure that the statute is very
    specific about that. But we have everything from issues
    relating to--if it is a fraud issue, what is the beneficiary
    harm? How many people are impacted? There are a number of
    different things that we consider.
        The statute does--when looking at civil monetary penalties,
    the statute does more globally, not specific to Part D but
    globally with Medicare, tell what are mitigating factors? What
    are aggravating factors and the like?
        I think, more generally, when we look at enforcement we can
    take a look at those sorts of things to consider what is the
    appropriate issue, how much is the beneficiary harmed, and how
    easy is it to solve? You know it when you see it, if you will.
        Mr. THOMPSON. Is that available to the Committee so we kind
    of get an idea of the problems that you are having and making
    that----
        Ms. NORWALK. One of the things that I mentioned to the
    Chairman is that we do plan to make the corrective actions that
    we have put into place public. I think I would like to do it in
    a way that the public can understand what it means. There is a
    lot of jargon that we use, so we will need to go back and make
    sure that we can put out summary information that is useful to
    the Committee. If you would like to see things behind that, I
    am sure we can share that with you as well.
        Mr. THOMPSON. When will that be, when we get that?
        Ms. NORWALK. I am hopeful that we can do it in the next few
    weeks. In short order.
        Mr. THOMPSON. Of the 600,000 beneficiaries that no longer
    qualify for the automatic enrollment in '07, how many much
    those folks are now enrolled in Part D?
        Ms. NORWALK. I am not sure I have--400,000 are back in. So,
    two-thirds.
        Mr. THOMPSON. So, 400,000 are enrolled?
        Ms. NORWALK. Have requalified for LIS, I will confirm that
    number. I want to be sure that is right.
        Mr. THOMPSON. What you are doing to contact those remaining
    unenrolled?
        Ms. NORWALK. There are two issues, I think. There are a
    number of different populations that had issues with the year
    change. Partly some of them may have lost their dual-eligible
    status, so reaching out to them to see if they qualify for the
    LIS status--I think that is the group you are speaking of--some
    of them may not qualify for LIS.
        Mr. THOMPSON. The LIS folks can enroll at any time.
        Ms. NORWALK. Correct.
        Mr. THOMPSON. Are you doing some sort of outreach to them?
        Ms. NORWALK. Yes, we did specific outreach. Everything from
    using specific colored letters so if they took it to a plan--if
    they took to a partner, the partner would know how to help them
    and the like and so on and so forth. Social Security sent them
    an extra application with a postage-paid envelope. We worked
    with the State Medicaid programs giving them a list of who
    these individuals are, so on and so forth.
        Mr. THOMPSON. Can we get an idea of how well we are doing
    enrolling those guys?
        Ms. NORWALK. That should be fairly easy for me to check, so
    I could get back to you in a few days.
        Mr. THOMPSON. Thank you.
        I yield back.
        Chairman STARK. Mr. Pomeroy, would you like to inquire?
        Mr. POMEROY. Thank you, Mr. Chairman.
        Ms. Norwalk, you testified almost a month to the day, May
    22nd, on Medicare Advantage private fee-for-service plans; and
    at that time there were a number of questions addressed to you
    which you did not have information with you. We sent you a
    letter dated June 5th and have been informed that there is
    still some time required for us to get the information from
    CMS. I would just alert you to information that I would like,
    and that is the FTEs that CMS has added for purposes of
    reviewing these private fee-for-service plans.
        Ms. NORWALK. I can tell you I don't think there have been
    any additional added. I suspect that we have moved around
    resources, and that might be a harder thing to determine.
        So, typically, what we will do when we go through a
    process, including whether it is private fee-for-service or any
    other increase in Medicare Advantage plans, we will often work
    with our regional offices as well as our central office. So,
    when someone is needing to do plan review we might move the
    resources around. But I don't know of any additional people
    that were hired specifically for this purpose.
        Mr. POMEROY. Earlier you indicated that you did not think
    the States should have a regulatory role beyond the role of
    agent licensure and solvency evaluation of the companies.
        Ms. NORWALK. Correct.
        Mr. POMEROY. But now you are telling us that ought to be a
    CMS function, this regulatory role; and now you are telling us
    that, by the way, we have hired no people to do it.
        Ms. NORWALK. I think we can do it with the resources that
    we have.
        Mr. POMEROY. When I was the insurance commissioner just for
    the State of North Dakota, I had 40 people involved in consumer
    protection. Obviously, not all of them dedicated to the senior
    market, although some of them were. How many personnel do you
    have devoted to making certain that the consumer safeguards are
    met in the State of North Dakota?
        Ms. NORWALK. I can't answer specifically for North Dakota,
    but there are a number of things that we do separate and apart
    from FTEs. One of the things we have done recently is credit
    with a group of three different companies called medics, and
    these medics will specifically look at both the prescription
    drug plans as well as the Medicare Advantage Plans going
    forward to look at waste, fraud and abuse and so forth. So, we
    have funded----
        Mr. POMEROY. Waste, fraud and abuse? I don't understand.
    How would waste, fraud and abuse be an issue on the insurance
    sale?
        Ms. NORWALK. It may well be. Some of the issues, as I am
    sure you are aware, relate to brokers who have forged
    signatures. That is a fraud issue. Anytime there is
    misrepresentation, one of the groups that may look into that,
    and these are a new one, including $14 million in additional
    funding this year.
        Mr. POMEROY. I absolutely do not understand why you have
    got so much more comfort contracting out at taxpayer dollars to
    private entities with no regulatory background and you don't
    want to expand the working relationship with State insurance
    departments, the professionals in consumer regulation, consumer
    protection when it comes to insurance.
        Ms. NORWALK. I absolutely do want to continue to expand the
    relationships we have with insurance departments, which is why
    we have worked----
        Mr. POMEROY. How do you see those relationships? In other
    words, if I am your State partner, I have got to have stuff to
    do, and stuff to do has got to get beyond licensing agents and
    looking at company solvency.
        Ms. NORWALK. I agree, and the medics are one piece of that.
        Let me go through the different pieces. One of the things
    we have done we have signed a memorandum of understanding that
    we developed with the National Association of Insurance
    Commissioners. We have signed that with 27 States, including
    the District of Columbia and Puerto Rico. One of the things it
    does is it allows the States who signed the MOU to have
    password access to see CMS compliance and enforcement actions.
    We would like to have consistent sharing of information between
    the States, CMS, our contractors and----
        Mr. POMEROY. I see that my time is about to expire.
        I will introduce into the record a letter received June
    19th, 2007, by the Chairman and Ranking Member of this
    Committee. It is signed by the President of the National
    Association of Insurance Commissioners and other officials with
    that association of State officials.
        They indicate in this letter: We urge you to restore State
    insurance regulatory authority over Medicare Advantage and
    Medicare prescription drug plans so that States can fulfill
    their traditional role of consumer protection in this area.
        It appears to me that your State partners do not feel like
    they are being partnered with.
        Ms. NORWALK. I am more than happy--I disagree with the
    premise of the letter, that the States need to have the ability
    to sanction the plans. They already have the ability to
    sanction agents and brokers. I think we need to work together
    not only in those two regards but also generally with law
    enforcement to be sure that we can share information, and the
    MOU allows----
        Mr. POMEROY. You know, there is an awful lot of company
    activity that ultimately drives market activities. I have been
    stunned to see protections that we put in place in the late
    eighties, protections I was intimately involved in drafting and
    putting into place now shunted aside by marketing practices of
    companies, that they are basically given this loophole, a
    complete pass on State regulatory authority that has long been
    in place protecting the senior market. I think it is a growing
    problem.
        I see my time has expired, Mr. Chairman. I do want to add
    this for the record, however.
        Chairman STARK. Without objection. It will appear in the
    record.
        [The information follows:]

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        [GRAPHIC] [TIFF OMITTED] 47757A.024

        Chairman STARK. Mr. Kind, would you like to inquire?
        Mr. KIND. Thank you, Mr. Chairman.
        I would like to thank the witnesses, especially you, Ms.
    Norwalk, for your patience today. I know it has been a long
    afternoon so far.
        I want to echo what Mr. Pomeroy was alluding to and that is
    the greater role that we should be allowing State insurance
    commissioners to play. They have expertise, they have got
    capacity, they have been doing this already.
        Frankly, I see a lot of shortcomings with CMS's oversight
    with these Part D plans right now. It is my understanding that
    CMS mainly is focused on the plan bid and contracting process
    in regards to oversight capability, and that seems to be
    falling short in a lot of areas. Allowing State insurance
    commissioners expanded authority to get in and start hearing
    appeals of consistent complaints could go a long way to
    alleviate the concerns that our offices are receiving almost on
    a daily basis.
        Let me highlight a few of the concerns which are consistent
    in what I am hearing from my constituents back home. The
    appeals process, how difficult it is to access and especially
    for some things such as formulary exception requests,
    enrollment decisions, billing issues. Especially on the billing
    issues, if there is a wrong billing issue that pops up with a
    senior on a fixed income and having a lengthy, drawn-out
    appeals process, this is very traumatic for many of these
    seniors to have to wait and try to get this resolved
    ultimately.
        I know you are eager to jump in, but let me also explain a
    couple of the other things that I am hearing so you have a feel
    of what is going on in western Wisconsin at least.
        But the open enrollment period and whether CMS could keep
    an open mind about establishing at least a special enrollment
    period for mistakes that were made. Whether someone was
    wrongfully enrolled in a plan or wrongfully disenrolled in a
    plan or some type of mistreatment along those lines.
        Finally, ultimately, the marketing practices. I know Mr.
    Fleming is going to be on the next panel from Humana, and I
    know it is going to be to get uncomfortable. Because we have a
    specific case in Wisconsin that just burned my britches, and it
    was the fact that they contracted out with a private collection
    agency to go out and hound and harass a 100-year-old senior who
    was wrongfully being charged premiums under Part D when she was
    Medicaid qualified. After the State aging specialist sent them
    verification that she was Medicaid qualified--and I am saying
    this now to give Mr. Fleming a chance to respond so I don't
    just spring this on him. After that State specialist contacted
    the collection agency and Humana five separate times, 4 months
    later, she was still notified, my constituent, that she was
    being disenrolled and that this private collection agency was
    hounding her for past premiums that she did not pay because she
    wasn't supposed to pay.
        Then the appeals process was so difficult, and it led to my
    office contacting Humana's office here in D.C. specifically
    asking them to look into this matter and what is being done to
    this 100-year-old wasn't right, only to get the response from
    the person at other line that they will try to issue a decision
    shortly. It will be the final decision with no further
    conversation. When we brought it to their attention that what
    they are doing now is against the law, she said that is going
    to be the ending of the conversation because it is getting too
    hostile.
        What we wanted was the right result in this. If that is
    what is going on out there with some of these people, it is
    just not right and it needs to be fixed. I think there are some
    proposals here that we are serious in addressing that maybe
    with your help and guidance we could try to get right at the
    end of the day.
        Ms. NORWALK. In terms of your initial comments in terms of
    only looking at the bids and so forth, I want to be clear we
    oversee a whole host of things; and I will get to your specific
    situation. I think it is important.
        In terms of marketing practices, without question, we look
    at those; and we do already have a special election period for
    individuals who have been told misleading information.
        So, inasmuch as you have an instance where that has
    happened and you know of it, please work with our Congressional
    Liaison Office. We are more than happy to do that change. We do
    that across the board whether or not there is a congressional
    sponsor. That is something else that you should know. We have a
    standard operating procedure in place to be sure beneficiaries
    get reconsideration and can change plans if that is necessary.
        The formulary exception process is something that we also
    pay very close attention to and ensure that there are many good
    reasons to have things--prior approvals or other utilization
    management techniques to help the beneficiary, particularly
    when many beneficiaries have numerous doctors and there may be
    contraindication or this same medication being prescribed more
    often than that.
        In terms of appeals and access, something else that we
    oversee, we do collect the appeals even at the plan level. We
    started to do this this year with drug plans. We will have more
    first quarter information shortly once we have taken a close
    look at the numbers and done some scrubbing.
        As to the enrollment, we have been working closely with the
    plans to make sure that we can fix those enrollment issues, not
    to mention the billing issues.
        To be clear, many of those may not be the fault of the
    plans. I would like to raise my hand and tell you that much of
    this is between CMS and Social Security and our computer
    problems. We have moved a long way to fixing them. We are not
    done. It is a horrible, intractable problem. I merely point
    that out. Blame rests squarely on my shoulders, and I can
    assure you we are doing all we can to fix it as soon as
    possible.
        Some of the issues may be plan related. I don't know about
    the particular situation there, but I don't want to pass the
    blame when, frankly, it may be mine.
        Mr. KIND. Thank you.
        I see my time has expired, Mr. Chairman. Thank you.
        Chairman STARK. Mr. Becerra, would you like to inquire?
        Mr. BECERRA. Yes, thank you, Mr. Chairman. Thank you.
        Ms. Norwalk, thank you for your patience; and, hopefully,
    we will let you be on your way pretty soon.
        I do want to mention--it is not the subject of this
    hearing, but I want to thank you for your diligence in trying
    to stay in touch with the County of Los Angeles with its
    ongoing issues with Martin Luther King Hospital. I am not sure
    where this is going to go, but I hope we work toward something
    that will continue to provide service to all the individuals
    who live in and around the area of the MLK Hospital, so
    hopefully some of those folks don't suffer by bad conduct by
    some of the folks at the hospital.
        A question with regard to your response to a letter I sent
    to you in April. I thank you for your prompt response in May to
    a concern that Chairman Stark and I raised to you with regard
    to services being provided to all Medicare beneficiaries,
    especially those with limited English proficiency. Could you
    give me more detail?
        It has only been a month and a half since you sent the
    response, so you may not have a lot more information to share
    with me. But I am concerned that--I am not sure if you have yet
    had a chance to really get on top of the plans to make sure
    that they are beginning to respond accordingly, as they are
    required to, to provide services to all individuals who are
    Medicare eligible for Part D. Do you have anything you can
    report on what is going on with the plans?
        Ms. NORWALK. I do not have any updates from the
    correspondents so--but will be back on Tuesday. So, if I have
    any then I would be more than happy to give it to you.
        One of the things I do know is that we had our conference
    with the State Health Insurance Assistance Program, the SHIP
    directors, a couple of weeks ago; and we focused on a number of
    things including those who may have difficulty understanding
    language. We have asked them to focus maybe 5 percent of their
    budget on those, not with those who have limited English
    proficiency but who have other mental issues in terms of not
    being able to understand what materials there are there.
        So, we have asked them to focus on that and are hopeful
    that it will make a difference as we move forward. That is one
    of the things we are concerned about. I will get you more
    specifics if we have an update to that. I am not sure if any
    new information is available on that.
        Mr. BECERRA. I look forward to hearing from you on Tuesday
    about that. I would ask between now and Tuesday that, if
    nothing has been done, that you try to tell us by Tuesday that
    something is being done.
        Every day that we go forward without doing something there
    are Medicare beneficiaries who are not receiving the benefits
    that they are entitled to. This has been going on for well over
    a year and a half how. So, I hope that CMS will perk up and
    take some of the compliance actions that you have outlined in
    your letter. Because I think it is outrageous that the plans
    knowingly are not moving forward when it is required of them to
    do so, and they are getting the benefits of providing services
    to these individuals, yet they are not providing all of those
    services. I hope by Tuesday you can give us some pretty
    specific information on what CMS is doing to enforce compliance
    by the plans on that particular item.
        Ms. NORWALK. Sure.
        Mr. BECERRA. I, Ms. King, have some concerns with regard as
    well to the $100 million that we are not yet clear how it was
    spent, where it went and what we got for it. I am wondering if
    you can tell us if you got enough cooperation from the folks at
    CMS in trying to discern answers about that 100 million that is
    still up in the air.
        Ms. KING. We did. They provided us information that enabled
    us to calculate the money that was actually paid out to the
    plan. So, they did cooperate with us fully on that.
        Mr. BECERRA. Did they cooperate fully and try to tell you
    what we received for those payments?
        Ms. KING. They don't know yet. I mean, they were--you know,
    they told us that they had not tracked that yet, and we
    recommended that they track it, and they agreed to do so.
        Mr. BECERRA. This is my difficulty. If I talk to somebody
    in my family, a constituent in my district, and ask them did
    you go to the store? Yes. Did you spend some money? Yes. How
    much did you spend? $100. Do you know what you got? No.
        It sounds kind of strange. We paid $100 million for
    something. Yet we can't be told what we got. I am not sure if
    you are telling me that you are satisfied with that answer,
    that, yes, the taxpayers gave the government 100 million which
    we did spend, the government spent, but we can't yet know from
    the government how we spent it.
        Ms. KING. We would like to know.
        Mr. BECERRA. I am glad you would like to know. I am
    wondering in the report why is it that we don't know.
        Ms. KING. I think, at the same time, we understand the
    genesis of the problem, the length of the enrollment process
    and the retroactivity that gave rise to it. I think we would
    like to know. We made recommendations to the agency that they
    do a better job of tracking the people and the months of
    eligibility and the amounts actually paid out.
        Mr. BECERRA. One last question, Mr. Chairman.
        Are you planning to follow up on this? Continue to track
    this?
        Ms. KING. We do as a matter of course follow up on all
    recommendations that we make to agencies.
        Mr. BECERRA. So, one of the issues that you will follow up
    on is how that money was spent?
        Ms. KING. Yes.
        Mr. BECERRA. Thank you.
        Thank you, Mr. Chairman.
        Chairman STARK. Mrs. Tubbs-Jones, would you like to
    inquire?
        Mrs. JONES. Good afternoon. I don't want to repeat
    questions that others have already asked, but has anybody
    discussed with you the issue of retroactivity and the fact that
    persons who are eligible for Medicare--that has been discussed
    already?
        Ms. NORWALK. I am happy to give you a quick response.
        Mrs. JONES. One minute.
        Ms. NORWALK. Absolutely. Yes, we have discussed it here.
    Basically, what we have done is we have let the State Medicaid
    agencies let beneficiaries know--I looked at Texas today--they
    said, do you have drugs for past receipts? Save them. We tell
    our partners to save them.
        Now, thanks to GAO's good recommendation, we sent a letter
    to beneficiaries when they qualify to say please save your
    receipts and send them in and the like.
        Mrs. JONES. Are you able to determine how many people
    received dollars through retroactivity and is there a statute
    of limitations for which you can apply for retroactivity?
        Ms. NORWALK. Typically, retroactivity goes--well, it would
    be January 1st of '06. That would have been last year. The
    States have that 3 months back from the date of application,
    but it probably depends on State law. In terms of filing with
    the plans those receipts, we have asked the plans to be
    generous; and it typically would include both the 3 months back
    and however many months----
        Mrs. JONES. You have asked them to be generous?
        Ms. NORWALK. We told them to be generous. Because they are
    getting premiums for those payments.
        Mrs. JONES. Let me switch course for a moment. Can you tell
    me--we have been in this program a year and a half now. How
    many people have reached the donut hole? What are you doing to
    help people through the donut hole? For the record, just in
    case people don't know what I am talking about, it is the point
    where they spent $2,500 and they have to reach $5,000 in order
    to get part of the plan and they continue to pay the premium.
        Ms. NORWALK. That is the second deductible.
        A couple of things. The first point is that last year we
    estimate somewhere between 3 and 4 million reached the coverage
    gap last year, the donut hole.
        Mrs. JONES. That is what percentage of those who are
    covered?
        Ms. NORWALK. There are 24 million who have the prescription
    drug benefit through the Medicare Program. That is not the
    retiree drug subsidy. So, one-sixth.
        Mrs. JONES. Keep going.
        Ms. NORWALK. The second piece in terms of helping them, one
    of the things we have done is worked very closely with States.
    States often have assistance programs. But also with the
    pharmaceutical manufacturers who have programs. So, that
    beneficiaries who are either in a coverage gap but may have
    difficulty in paying for the prescriptions--we have 47
    different programs. We have all of them available on our Web
    site. Obviously, there is no way for us to provide Federal
    funds under the statute there, but one of the things we do is
    give as much information as possible to help them. If they find
    themselves in a situation where they are in trouble
    financially, that we can help them through there.
        The other piece is the negotiated price for those
    prescriptions are offered in that donut hole, in that coverage
    gap, so that Medicare beneficiaries are not paying the full
    price that they might if they had no coverage at all.
        Mrs. JONES. It was speculated that in the process of
    implementing this program that much more than one-eighth of the
    recipients or persons participating in there program would have
    reached the donut hole. Is that not true?
        Ms. NORWALK. I don't remember the initial estimates. I
    could track them down.
        Mrs. JONES. I would appreciate you sending to me and my
    Committee Members this piece on only 3 to 4 million. What about
    the people who jumped the donut hole and are at the $5,000? How
    many people is that and what is the percentage?
        Ms. NORWALK. I will have that information. It is part of
    the process, much like those numbers that you were concerned
    about in terms of retroactive enrollment for dual eligibles,
    and we are going through a process for paying the plans from
    last year in 2006. We are reconciling our books to make sure
    that we have the right amounts, and we will know exactly what
    we are paying in terms of catastrophic coverage for
    beneficiaries both to the plans as well as the numbers. We will
    have those numbers. It will probably be a few more months
    before our reconciliation process is finished, but we will have
    that and be able to give you those specifics.
        Mrs. JONES. You have to get to the plans to get that
    answer, not to the individuals?
        Ms. NORWALK. Yes, that information will come from the
    plans. Because the plans cover the benefit once the beneficiary
    has gone through the donut hole. The plans will pay the claims,
    and we will reimburse the plan 80 percent. The plan pays 15,
    and the beneficiary pays 5.
        Mrs. JONES. I am particularly interested in that
    information. Oftentimes, we have these hearings, and we ask for
    information, and we don't get it. I want this information.
        Ms. NORWALK. Absolutely. I promise you will get it as soon
    as we finish the reconciliation process.
        Mrs. JONES. What are we talking about? A year from now?
        Ms. NORWALK. Fall. 2007, maybe a year from now; 2006 will
    be this fall.
        Mrs. JONES. Thank you, Mr. Chairman.
        Chairman STARK. Thank you.
        Ms. Norwalk, you are working with a contractor, as you
    state, to augment your resources for compliance audits. Who is
    that contractor?
        Ms. NORWALK. We have three contractors for the medics.
        Chairman STARK. Is that the same as the medics?
        Ms. NORWALK. Yes. Delmarva Foundation is one, the SAIC is
    one, and EDS is the third.
        Chairman STARK. SAIC and EDS. That is our Texas friends?
    Okay.
        Ms. NORWALK. Yes.
        Chairman STARK. Do you receive periodic reports from them?
        Ms. NORWALK. We do.
        Chairman STARK. Monthly, quarterly?
        Ms. NORWALK. Probably monthly, but I will have to confirm
    that. They have addressed 3,844 complaints, conducted 859
    investigations, referred 20 cases to law enforcement and sent
    11 immediate advisements to law enforcement.
        Chairman STARK. Would we be able to review those?
        Ms. NORWALK. I suspect that you could review most of them.
    The ones that are referred to law enforcement, it depends on
    where they are in law enforcement.
        Chairman STARK. I don't mean to make this the topic of the
    hearing, but if we sent our staff over they would be able to--
    --
        Ms. NORWALK. As long as it is not confidential because law
    enforcement is going after someone. I believe they would be
    happy to share that with you.
        Chairman STARK. Thank you. Thank you.
        I have one other question. I think last year there were
    three plans operating on waivers which meant that they were not
    licensed by any State. How many plans are operating on waivers
    now?
        Ms. NORWALK. I don't know that off the top of my head. It
    may be that they all have been licensed at least in one State,
    but I will have to check that. I know we worked with the plans
    before and asked them to get licensed. I don't know--I
    personally don't know, but I am sure it is knowable, so I will
    get back to you.
        Chairman STARK. It is my understanding that many of these
    plans operate on waivers even if they are not applying for
    licensure in a State; is that correct?
        Ms. NORWALK. No, we did require that they be licensed. I
    think it is three years. We required them to be licensed within
    a certain amount of time. I think that time is three years. But
    that is just off the top of my head. So, that they would have
    to at least go and apply.
        Of course, every State, in terms of licensing, can take a
    different amount time; and we wanted to be sure they were not
    held up by that in terms of operating their plans. But we do
    require them to be licensed ultimately.
        Chairman STARK. So, if they are not licensed by a State, we
    have no--and this is the point of my concern--we really have no
    independent assessment of the integrity of their assets?
        Ms. NORWALK. Well, we at CMS would do a review of their
    financials and ensure that they have the appropriate----
        Chairman STARK. Who would do that at CMS?
        Ms. NORWALK. I presume it is going to be one of the plan
    groups that does the oversight. The Center for Beneficiary
    Choices within there would do that review. Unless it is
    something that is actuarial.
        Chairman STARK. You have people who are capable of
    analyzing the integrity of an insurance company and their
    ability to pay for long-term liabilities?
        Ms. NORWALK. I suspect that we do.
        One of the things that happened with the Balanced Budget
    Act was the provider sponsored organization legislation that
    allowed CMS to do or HCFA to do just that where we had the
    oversight. So, it is a continuation of that. I believe that we
    work with the NAIC to determine what would be appropriate in
    terms of bonding to provide appropriate financial protection
    for beneficiaries.
        By the way, we work with the States whether or not a plan
    is licensed; and if we are concerned about the financial
    wherewithal of a plan, we will look to close them down.
        Chairman STARK. Thank you. That is a concern.
        As I say, we have run into that in private pension plans
    and a host of private union plans where they haven't had the
    resources; and I am mostly concerned where a plan gets stuck
    with some kind of long-tail liability that they just don't have
    the resources to absorb that.
        Ms. NORWALK. I frankly think that is a concern whether or
    not they are State licensed.
        Chairman STARK. If you are paying attention to it, then we
    will assume that responsibility is the government's.
        Any other Members? Mr. Doggett?
        Mr. DOGGETT. Are you familiar with, Ms. Norwalk, with the
    complaints or concerns that some pharmaceutical benefit
    managers and Medicare Advantage Plans earn interest off of the
    float between when they are paid and when they pay the
    pharmacies that actually provide the benefits to these
    beneficiaries?
        Ms. NORWALK. I haven't heard that specific complaint.
        Last year, to be fair, we heard a lot about pharmacies
    being concerned about the timeliness of payments. So, we did a
    review of how long it took to make payments, and I am happy to
    report that the billing cycle is typical to what you would see
    in the commercial market on a 30-day cycle, and there are--in
    fact, all the top 20 plans all of them pay between 30 days.
        Mr. DOGGETT. Is it fair to say, if I understand your answer
    right, you have never heard the complaint before about the
    middleman benefits from the float or benefiting from the float
    and you are satisfied with the survey you have that there is
    prompt payment to pharmacies?
        Ms. NORWALK. I am satisfied with the survey that certainly
    the top 20 plans, which are a significant 90-some percent of
    the enrollment of beneficiaries, do pay plans within 30 days.
    Not only that, they often--plans may pay pharmacies twice
    within those 30 days, and we do have the specifics in terms of
    the billing cycles.
        Mr. DOGGETT. If you would leave those with us, that would
    be helpful.
        In your formulary guidance documents, as I understand it,
    if a plan is not providing six therapeutic classes they would
    be in breach of contract?
        Ms. NORWALK. They do need to provide all the drugs within
    those six classes that we have enumerated. That is correct. If
    they are not, they would not be compliant. We would not approve
    their formulary until they did include them all; and if we did
    not approve their formulary, they couldn't bid.
        Mr. DOGGETT. Have you ever denied a contract application
    because of a discriminatory formulary?
        Ms. NORWALK. Typically, we would work with a plan to have
    them remove whatever the discriminating feature is; and we do
    include discrimination check on all formularies prior to them
    being approved and before they would be allowed to bid. So,
    rather than saying you cannot bid at all, we would work with
    them to say these are the specific aspects of your formulary we
    find discriminatory. You will need to change them.
        Mr. DOGGETT. Has that been done previously?
        Ms. NORWALK. I am quite sure it has. I do recall personally
    getting involved with a plan.
        Mr. DOGGETT. Can you provide information concerning
    determination that formularies were discriminatory?
        Ms. NORWALK. I would actually expect it is less likely to
    happen in 2007--not to mention the plan year 2008. It may have
    been more of an issue early on in the process. I will see if we
    have that information.
        Mr. DOGGETT. I was a bit confused by your responses to
    Chairman Stark on the question of why we should not codify
    those six therapeutic classes. I believe you indicated that
    science could change and perhaps we wouldn't need six classes.
    Is that one of your concerns?
        Ms. NORWALK. That that might be one thing. For example, if
    you have a black box warning or if you found out that some of
    those drugs were not safe. It also gives you more flexibility
    particularly around how is that particularly defined?
        One of the things I am concerned about, as I know the
    Members of the Committee are, is the cost of the prescription
    drug program. One of the things that happens when you mandate
    that a class be covered----
        Mr. DOGGETT. You do mandate it now through your contract
    documents?
        Ms. NORWALK. That is correct, and I am getting to that
    point in a second. But, by doing so, I assure you that one of
    the things we did was made it much harder for plans to
    negotiate a price around the drugs in those six classes.
        Mr. DOGGETT. Your contract makes it more difficult to
    negotiate?
        Ms. NORWALK. Requiring those six classes be covered. So,
    yes, our contract with the plans requiring them to cover six
    classes means that they have very little negotiating ability
    with the pharmaceutical manufacturers who make those drugs in
    those classes. Believe me, we heard from the plans complaining
    about it. Because they want to be able to provide the best
    coverage at the lowest price. But we felt it was so important
    that these classes be covered, at least with what we know now
    to put them there. If you put it in the statute, you take away
    some of that--the ability to ensure that you are balancing the
    safety and efficacy on the one hand, the economics on the other
    hand and, thirdly, the ability of the plans to negotiate while
    at the same time making sure that Medicare beneficiaries have
    the drugs they need, particularly in these classes that are
    very sensitive.
        Mr. DOGGETT. So, with time about to expire, yes or no, do
    you support codifying your current policy?
        Ms. NORWALK. No, I don't think it needs to be codified.
        Mr. DOGGETT. Thank you.
        Chairman STARK. Mr. Camp.
        Mr. CAMP. Thank you, Mr. Chairman.
        Ms. Norwalk, we are going to be receiving testimony that
    one patient has had to stop seeing their regular community
    provider because they were unable to dedicate the resources
    needed to get the frequent authorizations required by drug
    plans. Now isn't it true that beneficiaries need just one prior
    authorization decision for the entire year for the prescription
    they are seeking to fill?
        Ms. NORWALK. Yes, that is true. There may be an instance--
    for example, one of the things that the Medicare statute
    requires is that if it is covered under the Part B program--B
    as in boy--then the prescription drug plan cannot cover it.
    There may be an instance, somebody has moved from one setting
    to another, a second prior authorization may make sense. But
    generally, yes, once a drug is prior authorized it should not
    be required to be done again.
        Mr. CAMP. With regard to AIDS drugs and other drugs in the
    six protected classes, do beneficiaries need to receive prior
    authorization?
        Ms. NORWALK. With AIDS drugs, no. There is one AIDS drug
    that would be prior auth. If they are new AIDS drugs that come
    to market, they do typically--if they are added to the
    formulary later in the process, they may be prior authorized. A
    couple of exceptions, but generally, no, AIDS drugs are not.
        With chemotherapy drugs, immunosuppressive, also, in the
    six protected classes they may be prior authorized,
    particularly because of that B versus D issue that I mentioned;
    and that is a lot of the complaints that we hear from people.
    But, generally, those drugs are not prior authorized.
        We see prior authorization in some instances as very
    important, when in particular Medicare beneficiaries,
    statistically, 23 percent of them see a dozen doctors a year
    because they have five or more chronic conditions, they have 50
    prescriptions. If you can imagine a dozen doctors writing
    scripts for 50 prescriptions, you may have duplicates.
        I think there are very good reasons and safety checks to
    ensure that prior auth be used in many instances, but certainly
    in the AIDS category we are very concerned about that. If we
    hear of specifics we are more than happy to go back to the
    plans and ensure that beneficiaries are getting the drugs we
    intend them to get.
        Mr. CAMP. I just wanted to touch on the GAO report and the
    comments about the 100 million that Medicare has paid to
    different prescription drug plans. The purpose of this is to
    cover what we call retroactive coverage; is that right?
        Ms. NORWALK. Correct.
        Mr. CAMP. That is coverage where individuals become
    eligible, and this backdates to a former time.
        Ms. NORWALK. Correct.
        Mr. CAMP. From what I understand from the testimony, there
    is going to be a reconciliation of this $100 million that will
    get into plan-specific information which in terms of the
    numbers of beneficiaries and the amounts these beneficiaries
    have received that we can expect some time in the fall?
        Ms. NORWALK. We should know more. If I am wrong about that
    I will get back to you, but we should know more about that once
    we go through the reconciliation process and get more
    specifics.
        I would like to point out in the GAO report they did not
    object to our linking the effective coverage date to Medicaid's
    retroactive eligibility date. The interesting thing is, once
    you are dual-eligible, the statute requires you to be covered
    by Medicare for your drug benefit. But for other benefits, even
    for retroactive eligibility in Medicaid, of course you can
    bring your receipts in to the State and the State will
    reimburse you. Conceptually, it works the same way; and we want
    very much for it to work on a go-forward basis.
        I am grateful for Ms. King's report, which is one of the
    reasons why in March we said we will tell the beneficiaries
    specifically in a letter about retroactive enrollment in this.
    We had always provided information to beneficiaries and
    partners about, hey, save your receipts, send them in, the
    plans will reimburse you for them.
        I, too, will be very interested to know how this has been
    working with the plans and look forward to sharing with the
    Committee more details as to how many plans have been
    reimbursing beneficiaries for this retroactive bit. But these
    are premium payments, and you are getting paid for coverage,
    and that is really the point.
        Mr. CAMP. Thank you very much.
        Thank you, Mr. Chairman.
        Mrs. JONES. Quickly--thank you, Mr. Chairman--how much
    money was allocated to educate recipients about retroactivity?
        Ms. NORWALK. I don't know if there is anything specifically
    about retroactivity.
        Mrs. JONES. Maybe not retroactivity. Excuse me,
    reimbursement.
        Ms. NORWALK. Reimbursement generally? I can tell you about
    all the publications. I don't know how much we paid to print
    them and so on and so forth.
        I can tell you more generally, in terms of working with our
    partners, tens of millions of dollars. But it is very hard to
    know--when you are working with someone you may have a number
    of things that come up----
        Mrs. JONES. You are not telling me that tens of millions of
    dollars were spent on educating our seniors receiving Medicare
    prescription drug benefit that they were eligible for
    reimbursement----
        Ms. NORWALK. No, no, no----
        Mrs. JONES. That is my question. How much money was
    allocated to discuss with seniors reimbursement?
        Ms. NORWALK. I suspect--it would be hard for me to know. I
    don't know that it is a number that is knowable, because it is
    a part of many things that we work with our partners, including
    the SHIPS.
        Mrs. JONES. I want that answered. It is not something that
    is knowable? What is ``knowable?'' What does the word
    ``knowable'' mean?
        Ms. NORWALK. I don't know. Meaning I don't think it is
    possible for me to go back and ask anyone at CMS, gee, how much
    do we spend toward this line item specifically?
        I do think, more globally, it is a package of information
    that we provide to beneficiaries for which we spend a
    significant amount money educating them. It is a piece of what
    we educate them on, but there has not been anything
    specifically in terms of you must spend X number of dollars on
    this particular component. It has been more global in terms of
    education.
        Mrs. JONES. Let me say this to you. When we put in program
    in plan there were lots of seniors that were totally confused
    and overwhelmed about how to sign up for the program. If they
    are overwhelmed about that, clearly they were probably
    overwhelmed about reimbursement. I am suggesting to you that
    even if you can't delineate the specific amount of money that
    was allocated to talk to them about reimbursement, it would do
    you well on behalf of all the seniors out here who are pinching
    pennies to find out whether you did a good job at it and figure
    out what dollars you could expend to do that. In your report to
    me about those other things I asked you about, even if you
    can't delineate a number for me, I would like to know.
        Ms. NORWALK. We can certainly show you all the things we
    have done in terms of outreach materials----
        Mrs. JONES. I don't want to see that. I have seen that, and
    I have been part of the outreach in my congressional district.
    I am specifically asking you about reimbursement.
        Ms. NORWALK. We may know more once we do the reconciliation
    process so we can figure out specifically where we had issues.
    Which is to your point, has it worked or hasn't it worked.
    Well, we will know once we finish----
        Mrs. JONES. That wasn't my question. That is something you
    want to answer. The question is about reimbursement for the
    seniors who was out here. Ma'am, you don't have to keep giving
    me your on and on answer. Just get the answer I want. Okay?
    Thank you.
        Ms. NORWALK. Okay.
        Chairman STARK. I, too, Ms. Norwalk, have another issue
    that has come up. I think you mentioned that beneficiary
    premiums decreased. But we were advised by Consumers Union who
    said they looked into 60 plans in a particular ZIP Code in
    Texas, and they found that 32 plans had increased their price,
    20 stayed the same and eight decreased. They also found that in
    another New York ZIP Code, 61 plans offered coverage in
    February of this year and, by June, 35 of those plans had
    increased, 17 stayed the same and nine decreased.
        So, that basically sounds like there is a little bit of
    bait and switch. Because the beneficiaries can't change. They
    shop around for the lowest price. Then these shylocks go and
    raise the price on them during the year. Why should we allow
    that?
        Ms. NORWALK. Actually, you raised two different issues. The
    first issue in terms of the premiums between 2006 and 2007,
    this is a calculation that our actuaries make.
        Chairman STARK. Why should we allow the plan----
        Ms. NORWALK. Let me explain why there is a difference.
        Chairman STARK. Stop a minute. Just, in a sense, why should
    we allow the plans--in one case, a plan had a 26 percent
    increase during the year. I mean, these guys are supposed to be
    insurance pros. Unless you allow the beneficiary to change--but
    if you lock the beneficiary in, why isn't it fair to say that
    the plans ought to hold their premium and their formulary
    steady for the year?
        Ms. NORWALK. Well, the premiums do stay stable for the
    year. I suspect Consumers Union is complaining about cost-
    sharing or coinsurance of the price of the prescription.
        Chairman STARK. That is an increase in cost.
        Ms. NORWALK. But it is different from the premium, just to
    be clear. But the reason it's important is because 93 percent
    of beneficiaries chose plans with copayments, and those
    copayments in fact do not change throughout the year. If you
    are in a deductible period, the price of a prescription may go
    up or go down, but the copayments do not change if you are in a
    benefit period. I think it is important to know that most
    beneficiaries chose plans and have that option of taking a
    copayment, rather than coinsurance, where they are protected
    from price changes. In terms of----
        Chairman STARK. I guess my question is why we should allow
    it. In this ZIP Code there were 61 plans, Zip Code 00501. You
    are quite correct it was increase in costs--35 increased their
    costs, 17 stayed equal, and nine--bless them--decreased. But--
    --
        Ms. NORWALK. It depends on the prescription.
        Chairman STARK. But the increase was 178 bucks.
        Ms. NORWALK. It would depend on the vast prescriptions that
    you review.
        Chairman STARK. Why should we let them change it?
        Ms. NORWALK. It is a basic nature of how the prescription
    drug market works in the commercial sector as well as in
    Medicare. So, even under the Federal Employee Health Benefit
    Program, you may pay different amounts for the same drug.
        Chairman STARK. Just slow down a bit. I don't care which
    way you want to go on this, but it doesn't seem fair to me if I
    sign up for a plan, pay my premium and I have shopped, so I am
    in the free market, which we like to protect, that then I got
    to stay in that plan for a year. But if a plan changes the
    cost, which is important to me, I can't change. Why is that
    fair?
        Ms. NORWALK. It actually may not be that the plan is
    changing the cost per se. Let me explain.
        Chairman STARK. Why is that fair that there should be any
    change?
        Ms. NORWALK. Because beneficiaries could choose plans that
    wouldn't have a change because they are getting copayments, and
    93 percent of them did choose that. But the issue is not so
    much the plan change in the cost; it is how the plan reimburses
    the pharmacy for the prescription. It is typically on the basis
    of something, as you know, called a wholesale price.
        Chairman STARK. This isn't costing the beneficiary. All I
    am saying is that if the plan changes the cost to the
    beneficiary, but the beneficiary can't change plans, why is
    that fair? Why shouldn't the plan be locked in to say, look,
    you are going to tell me what my cost is when I sign up so we
    have a contract, I guess, as we lawyers would call it? Now, why
    should they be able to wiggle out of it by changing the cost
    and I can't change plans?
        Ms. NORWALK. We do. I think it is important to let
    beneficiaries know up front that some of their costs may
    change, particularly if they choose plans that have co-
    insurance and not copayments.
        Chairman STARK. Then why don't we let them change plans?
        Ms. NORWALK. Partly it is a matter of the administrative
    burden. That would be why.
        Chairman STARK. It depends on these poor plans that aren't
    making any money, huh? Okay. Well, I am just glad to see which
    side you come on.
        Mr. Camp.
        Mr. CAMP. I was just going to suggest, if the questions are
    completed, maybe we could go to the second panel. We have all
    had a couple of chances here.
        Chairman STARK. I have a couple more on this issue, Mr.
    Doggett.
        Mr. DOGGETT. Do you believe it is desirable for consumers
    to know which plans offer the most possibility and which offer
    the most bate and switch.
        Ms. NORWALK. I do think it is important for beneficiaries
    to know. In fact, that is why we have included it in our
    consumer reports that they will have available for the 2008
    plan year.
        Mr. DOGGETT. So, in the 2008 plan year, somebody will be
    able to go back and see how much the plan changed.
        Ms. NORWALK. They will have some idea relative to the other
    plans; that is correct.
        Mr. DOGGETT. What form will it take?
        Ms. NORWALK. I will have to get back to you on the
    specifics. I think it is stars. We want to make it as easy as
    possible; one, two, three or four, or whatever. I think it is
    one to three stars, depending how stable your request is.
        Mr. DOGGETT. Do you have any objection to legislation to
    require plans to tell consumers what the price change has been
    during the prior year on the package of, say, the hundred most
    commonly prescribed drugs.
        Ms. NORWALK. I think consumer information is fine. I don't
    know that you need to require it in a statute. But if that is
    the suggestion, that is sort of what we are trying to get to
    with price stability, is that same type of information,
    something they can understand.
        Mr. DOGGETT. Apparently the Texas plans that were surveyed
    by Consumers Union all have stars. You are saying this is a
    prospected development, this is something you will do in the
    future that you have not done in the past? Is that correct?
        Ms. NORWALK. No. I think the issue is, what is the--this is
    actually currently on our plan finder now; the stars are. But
    we provide, it is a level of data that is underneath that that
    I think is important on a go forward basis, just to make sure
    that, if beneficiaries are choosing plans, compared with the
    others, have their prices moved more or less relative to other
    plans that are available in the area? Or might they want to
    choose a plan with a copayment like most beneficiaries have
    chosen to insulate themselves from those price changes?
        Mr. DOGGETT. I am glad you don't object to legislation to
    address this problem. I just want to be sure that I understand
    where you are on this. As I understand it the plans, consumers'
    union survey, all had a star so that, the Texas plan, so that
    if someone were looking at it, they would assume they are all
    fine. I believe what you are saying----
        Ms. NORWALK. I think the point is a comparative tool. So,
    what we wanted is to be able to say, are they the same or
    better or worse than the plan next door?
        Mr. DOGGETT. That is all very reasonable, but are you going
    to have a separate column or category where a single or
    disabled person looking at that column would be able to
    evaluate the plans on the sole basis, separately, of whether
    they had price stability or whether they did a lot of bate and
    switch?
        Ms. NORWALK. Well, the price stability is in fact one of
    the many things that we give a rating for. The information that
    is underneath that I think is what you are asking for. I will
    check and see.
        Mr. DOGGETT. You are giving an overall rating, and I am
    asking whether you would specifically be able to compare plans
    based on price stability.
        Ms. NORWALK. I think, yes, that is something we will be
    making, if we don't already, that we will be making available
    on a number of features, not all specific, not just a single
    plan that is one, two or three star, but also the features
    below that.
        Mr. CAMP. If the gentleman would yield, I don't think we
    have Medicare evaluating the physicians or hospitals at this
    point.
        Ms. NORWALK. We are getting there.
        Mr. CAMP. So, there is a huge field here talking about
    evaluation of providers.
        Mr. DOGGETT. This is on effectiveness, this is just solely
    on whether they bate and switch. As I understand it, you agree
    it is good to provide that information and you hope to provide
    it.
        Ms. NORWALK. Correct.
        Mr. DOGGETT. Thank you.
        Chairman STARK. Thank you both of you for your patience and
    letting us to try your patience.
        Thank you, Ms. King.
        Thank you, Ms. Norwalk.
        We are on panel two: Dr. Steve O'Brien, an HIV/AIDS
    specialist from my neck of the woods, Oakland, California.
    Thank you, Dr. O'Brien, for coming out here and taking good
    care of our constituents in Alta Bates.
        Dr. William Fleming, a doctor of pharmacy, who runs
    Humana's Part D product line. It will be interesting to have
    the plan perspective when we talk about changes to improve the
    beneficiaries benefits.
        Mr. Paul Precht from the Medicare Rights Center will
    discuss enrollment issues.
        Mr. Tom Maher with Medicare Today will talk about
    beneficiary education.
        Finally, Ms. Vicki Gottlich, who is joining us from the
    Center of Medicare Advocacy, will talk about beneficiary
    grievances and appeals.
        Dr. O'Brien, we have all of your written testimony, and
    without objection, it will appear in the record in its
    entirety. Would you care to enlighten us in about 5 minutes, an
    overview of information, we would appreciate it. Please lead
    off. I have to add that my oldest two daughters were both born
    in Alta Bates; how do you like that?

      STATEMENT OF STEPHEN O'BRIEN, M.D., MEDICAL DIRECTOR, ALTA
        BATES SUMMIT EAST BAY AIDS CENTER, OAKLAND, CALIFORNIA.

        Dr. O'BRIEN. Thank you, Mr. Chairman.
        Alta Bates is the third busiest delivery hospital in the
    United States, so we see a lot of babies there.
        Chairman STARK. This is before you had an emergency room or
    any more than one building. I don't want to tell you how long
    ago it was.
        Dr. O'BRIEN. Good afternoon, Mr. Chairman, and
    distinguished Members of the Committee. My name is Steve
    O'Brien, and I am the medical director of the East Bay AIDS
    Center affiliated with Alta Bates Summit Medical Center in
    Oakland, California. The East Bay AIDS Center was the first
    community-hospital-based HIV program in the country, and we are
    currently the largest community-hospital-based HIV program in
    the United States. We provide primary and secondary specialty
    medical care to more than 1,300 people living with HIV/AIDS,
    most of whom are indigent people of color; a third of our
    patients are women; and we have the largest youth-specific HIV
    clinic in California.
        I am an HIV specialist, and I serve on the Public Policy
    Committee of the American Academy of HIV Medicine, a nonprofit
    organization of HIV specialists. The academy is a part of a
    broader coalition of advocates known as the HIV Medicare and
    Medicaid Working Group which is focused on improving the lives
    of those living with HIV disease who are on Medicare and
    Medicaid.
        The great news is that, in the United States, AIDS is not
    the disease that it used to be. Thanks largely to effective
    antiretroviral therapy prescribed by HIV expert providers,
    mortality from AIDS have fallen 80 percent. However,
    suppression of the HIV virus demands strict adherence to
    individualized complex daily regiments. Drugs that work for
    patient A may not work for patient B and vice versa. Because
    these drugs are not interchangeable with one another, HIV
    patients need unhindered and uninterrupted access to all of the
    FDA-approved medications available to treat the disease.
        Since the advent of Part D, Medicare now offers drug
    coverage to about 100,000 beneficiaries with HIV, which is
    about 20 percent of all people living with HIV in care in the
    United States. While the addition of the Medicare drug coverage
    to those without prior drug coverage is clearly beneficial, the
    majority of my 450 HIV Medicare patients are worse off now than
    they were before the passage of Medicare Part D.
        Most of my patients had good drug coverage before Part D,
    and the new program has been challenging, often disruptive and
    more costly to them. Patients have had trouble accessing drugs
    and have gone without medications they can't afford or they
    can't get. Enrollment problems and/or changes in plans have
    also caused disruption in patient access. We are a tertiary
    referral center, and we receive many patients who have had to
    transfer from community providers that were previously seen for
    many years because those community providers lack the resources
    to deal with the frequent authorization processes required by a
    Part D medication.
        There are many plans that require monthly authorizations
    for crucial medicines such as fluconazole for cryptococcal
    meningitis. Many patients also left their community pharmacy
    and transferred to less convenient HIV-specialty pharmacies
    because those pharmacies have the expertise available for
    handling all the paper work required for Medicare Part D.
        This didn't happen when these patients were receiving the
    same drugs through Medicaid or through the AIDS Drug Assistance
    Program or ADAP. Some plans have placed some HIV drugs in
    higher tiers, making them more expensive and difficult to
    access. Tiering the drugs in this way can effectively drive
    patients away and rid many plans of their expensive AIDS
    patients. Patients with excessive cost-sharing burdens are
    choosing not to take some drugs or to reduce dosing in order to
    save money. One of my patients has chosen to return to an old
    seizure medication which has more side effects, but it is
    cheaper for her than the less toxic and more effective
    alternative. Many.
        Patients with prohibitive cost-sharing for their visits and
    equipment are coming into the clinic less frequently and
    refusing to see subspecialists in order to minimize their out-
    of-pocket costs. These cost-sharing expenses used to be covered
    by ADAP when their drug coverage was provided by Medicaid and
    ADAP in California. But now, with Part D covering these
    medications, these patients are facing new expenses for their
    medical care they were not previously experiencing and are
    rationing their care. One patient I saw on Monday, for example,
    cut her visits now to twice a year, and she is reluctant to see
    her neurosurgeon and follow up for her brain tumor because she
    feels she can't afford these high expenses because she is
    caring for her elderly patients.
        The academy and the HIV Medicine Association recently
    conducted a joint survey of their members on how Medicare Part
    D has affected HIV care. A particular concern is the high
    percentage of providers like me who reported that the dually
    eligible patients are now worse off under Medicare Part D. Many
    of the problems appear to stem from complex, often
    inappropriate, prior authorization processes and incorrect
    assignment of low-income subsidies for beneficiaries. These
    problems occur despite the protections for antiretrovirals and
    the five other drug classes included in the CMS formulary
    guidance.
        In order to improve the Part D law, I have five brief
    specific recommendations: Number one, provide codified
    protection for the six protected classes. CMS has included
    antiretrovirals as one of the six protected classes so its Part
    D plans are required to cover all or substantially all drugs
    and prohibits plans from applying utilization management, such
    as prior authorization, to HIV medication. Despite the guidance
    language, the committed staff at CMS led by Dr. Jeffrey Coleman
    is working hard, but not all plans are complying. Just this
    last week, Dr. Wong in Massachusetts reported a patient
    receiving a very common HIV antiretroviral medication was
    denied because there was no prior authorization. Providers are
    often too frustrated, too busy with the delivery of patient
    care or just too overwhelmed with the burden of paper work
    generated by Part D to plead their cases to CMS. The protection
    for these six classes is essential but is currently only
    offered as guidance by CMS and must be renewed annually.
        My colleagues and I urge Congress to write into law the
    protections for these six classes, including HIV medications.
    In addition, drug plans who consistently violate those
    provisions should be sanctioned and evaluated for their
    continued participation in the Part D program. We are united in
    this goal with a wide range of national organizations
    representing those with mental health challenges, cancer and
    epilepsy.
        Number two, coverage for new antiretrovirals must be
    provided within 30 days of FDA approval. New approved
    antiretroviral drugs of protected classes are subject to
    expedited review within 90 days. But that is too long to wait,
    because these new drugs are really for people with very, very
    advanced disease, and they are the only option they have.
    Waiting 90 days for a new drug when you have no immune system
    is really no option when it can mean life or death. Newly
    approved medications in the six classes should be added to all
    formularies within 30 days of FDA approval, and this would save
    lives.
        Number three, cost-sharing should be capped for low-income
    patients. People living with HIV/AIDS generally receive a dozen
    or more prescriptions per month. The sickest patients have the
    most medications, and cost-sharing disproportionately burdens
    people who are the sickest and poorest and who survive in the
    Bay Area on incomes of $600 to $1,200 a month. For the poorest
    of patients, even copayments as low as $3 to $5 per
    prescription can add up, forcing them to choose between food,
    shelter and life-saving healthcare and treatment. Many of my
    patients with co-pays will pick up only a portion of their
    medication or they will skip months at a time when they feel
    money is tight, and they can't afford that. That threatens
    their health. Congress should consider passing a beneficiary's
    monthly cost-sharing burden, particularly for the lower income
    patients who cannot afford multiple copayments every month.
        Number four, coverage during enrollment changes and
    transitions in coverage needs to be guaranteed. Proper
    enrollment into a drug plan has been difficult. During times of
    transition between plans, patients and their providers are
    often confused. Many patients often don't even know their plan
    has changed. Many of my patients claim they never get the
    letter, although I am sure it has been mailed. This requires
    reauthorization for their drugs and often a delay in getting
    them their medication.
        There is also some bad actors amongst the plans. Earlier
    this spring, one company, Sierra RX, abruptly disenrolled
    hundreds of HIV patients from coverage in their enhanced plan.
    The disenrollments were unjustified, and after a time-consuming
    case-by-case investigation by CMS, which found no cause for the
    abrupt dismissal, CMS mandated reenrollment, but not before a
    patient's health had been endangered. Enrollment and
    disenrollment protection should be enacted.
        Finally, number five, ADAP payments should count toward
    true out-of-pocket expenditures. Many patients with HIV rely on
    Ryan White's AIDS Drug Assistance Program for coverage prior to
    Part D. But now, ADAPs require all these patients to enroll in
    the Medicare Part D benefit. However, since HHS is interpreted
    to be MMA, such that ADAP expenditures do not count toward the
    true out-of-pocket expenditures or TrOOP, beneficiaries
    receiving support from ADAP will never come to their doughnut
    hole and ADAP will continuously be used to pay for these
    expenses. This further strains the very limited ADAP programs.
    Federal law should support efforts to maximize Medicare
    coverage and allow expenditures made by AIDS Drug Assistance
    Programs to count toward TrOOP.
        In conclusion, Medicare Part D, has been helpful to a few
    of my patients. But to many of my patients, it has been
    confusing, stressful and disruptive for their care. For the HIV
    clinicians, it has been challenging on the best of days, and
    frustrating and overwhelming on the worse. We spend hours on
    the phone at our desk filling out authorization requests for
    different plans. But the different requests for different plans
    is confusing. My nurses and pharmacists tell me they are now
    spending at least twice as much time per patient getting the
    same drugs now that they are on Medicare Part D as they did
    prior to that. The hours spent on patient advocacy are robbed
    from our limited time with patient care.
        So, Congress has an opportunity to help by providing
    safeguards for the six protected classes by mandating access to
    new antiretrovirals within 30 days, by capping out-of-pocket
    cost-sharing for low-income patients, by guaranteeing coverage
    during plan transition, increasing surveillance and sanctioning
    by bad actors, by guaranteeing at least one enhanced plan that
    offers coverage through the doughnut hole and by allowing ADAP
    expenditures to count toward true out-of-pocket expenditures.
    We appreciate the hard work of this Committee, particularly the
    Chairman and Members. I appreciate the opportunity to share my
    story and happy to answer any questions you might have.
        [The prepared statement of Dr. O'Brien follows:]
     Statement of Steve O'Brien, M.D., Medical Director, Alta Bates Summit
                   East Bay AIDS Center, Oakland, California
        Good afternoon. My name is Stephen O'Brien and I am the Medical
    Director of the Alta Bates Summit East Bay AIDS Center in Oakland,
    California, which provides primary and specialty medical care to more
    than 1,300 HIV-infected people, most of who are indigent people of
    color living in the Oakland area and surrounding counties. I am an HIV
    specialist in internal medicine, and I serve on the Public Policy
    Committee of the American Academy of HIV Medicine, a non-profit member
    organization of HIV specialists throughout the United States.
        The American Academy of HIV Medicine is a member of a broader
    coalition of committed advocates through the nation known as the HIV
    Medicare & Medicaid Working Group, which is focused on improving the
    lives of those individuals living with HIV disease and receiving care
    and treatment from either or both of the Medicare and Medicaid
    programs.
    I. Overview:
        By now most Americans are familiar with the dramatic improvements
    in the treatment of HIV infection that have reduced mortality due to
    the disease by nearly 80 percent. Once almost always considered a fatal
    diagnosis, HIV disease can now be managed with consistent and reliable
    access to a combination of medications known as highly-active
    antiretroviral therapy (HAART).
        These medications are critical to the health and well-being of
    patients infected with HIV/AIDS; however, successful viral suppression
    demands strict adherence to a complex drug regimen that requires
    multiple doses of three or more highly expensive medications daily. In
    addition, antiretroviral medications are simply not interchangeable
    with one another due to individual physiologic factors and differences
    in toxicity, efficacy, drug interactions, and drug-sensitivity of the
    patient's virus. As a result, it is critical that people with HIV/AIDS
    maintain unhindered access to all of the FDA-approved medications
    available to treat the disease and its complications. Beyond viral
    suppression, people with HIV disease often must contend with
    opportunistic complications and serious co-occurring conditions such as
    hepatitis C and mental illness, as well as complications such as
    diabetes, elevated cholesterols, and heart conditions resulting from
    the HAART medications themselves.
        Through the passage of the Medicare Modernization Act of 2003,
    Medicare now offers prescription drug coverage to approximately 100,000
    Medicare-eligible beneficiaries with HIV/AIDS, roughly 20% of those in
    care. Medicare is the second largest source of federal funding for HIV
    care and treatment after Medicaid.
        While the addition of Medicare drug coverage to those without prior
    drug coverage is clearly beneficial, for the majority of my 450
    California Medicare patients, many of whom had good drug coverage
    before Medicare Part D, the program has been challenging, often
    disruptive and more costly. Patients have had trouble accessing
    antiretrovirals and treatment for opportunistic infections. Patients
    have gone without medications they can't afford or can't access through
    their new plans. Changes in plans have caused disruption in patient's
    access to long term medications. Some patient's have had to transfer to
    new medical providers and pharmacies that specialize in the complex
    authorization processes required by various insurers.
        Most antiretrovirals are readily available through most plans.
    However, some plans have placed some antiretrovirals in higher tiers,
    thereby making them more expensive or more difficult to access. Most
    patients, who are not ``locked into'' plans, have changed plans, those
    who are locked in have changed during open enrollment; therefore,
    tiering effectively rids many plans of their expensive AIDS patients.
        It is not just the antiretrovirals, however, that patients are
    having difficulty accessing. For example, we have had many patients
    have difficulty receiving the antifungal fluconazole to treat
    cryptococcal meningitis. Fluconazole is the treatment of choice for
    this common opportunistic infection but many plans delay authorizing
    this drug or require monthly reauthorizations. This has led to
    prolonged hospitalizations and gaps in treatment.
        Patients with excessive cost sharing burdens for their drugs are
    sometimes choosing not to take some drugs or to take reduced dosing in
    order to save money. One patient has chosen to return to a cheaper
    anti-seizure medication (Dilantin) with more side effects because it is
    cheaper than the less toxic alternative (Keppra) we had her taking.
    Many patients with prohibitive cost-sharing for their medical visits
    and medical equipment are coming to clinic less often and refusing to
    see subspecialists in order to minimize their out of pocket
    expenditures. One patient I saw on June 18 has cut her visits to twice
    per year and is reluctant to see her neurosurgeon for follow up on her
    brain tumor because she feels she can't afford her high share of the
    cost of care.
        As a tertiary referral center, we have received several patients in
    transfer who had to stop seeing their regular community provider
    because they were unable to dedicate the resources needed to get the
    frequent authorizations required by Medicare Part D plans. For the same
    reason, many patients have left their more convenient community
    pharmacy and transferred to less convenient HIV specialty pharmacies
    that have the expertise to file the appropriate paper work to get the
    drugs the patient needs. This didn't happen when these patient's were
    receiving the same drugs through Medicaid or the AIDS Drug Assistance
    Program (ADAP).
        But compare my individual experience with a broader picture of the
    nation's HIV patients. The American Academy of HIV Medicine (AAHIVM)
    and the HIV Medicine Association (HIVMA) recently conducted a joint
    survey of their HIV medical provider members to obtain information on
    how Medicare Part D has affected HIV care today.
        HIV medical providers reported challenges obtaining antiretroviral
    and non-antiretroviral medications for their Medicare patients with
    HIV/AIDS. Many of the problems appear to stem from complex and in some
    cases inappropriate prior authorization processes; high prescription
    drug co-payments; inadequate formulary coverage of both antiretroviral
    and non-antiretroviral medications--such as cholesterol medications,
    pain medications, medications for HIV-related opportunistic infections
    and hypertensive medications. Moreover, there have been data system
    problems at the Centers for Medicaid and Medicare Services (CMS) and at
    the Medicare prescription drug plans, including incorrect assignment of
    Low Income Subsidy for beneficiaries. These problems occurred despite
    the protections for antiretrovirals and the five other drug classes
    included in the Centers for Medicare and Medicaid (CMS) 2006 and 2007
    formulary guidance.
        Of particular concern is the high percentage of HIV medical
    providers who reported that their patients who are dually eligible for
    Medicare and Medicaid are worse off under Medicare Part D. With
    Medicaid drug coverage, this population had access to an open drug
    formulary and in many states were not subject to cost-sharing. (If they
    were subject to cost sharing, Medicaid law ensures that beneficiaries
    are not denied access to drugs or other services due to an inability to
    meet cost-sharing obligations.) Low income people with HIV/AIDS can
    face significant cost sharing obligations under Medicare Part D,
    forcing them to forgo necessary medications in lieu of food or rent.
    The Medicare Modernization Act of 2003 called for CMS to conduct a
    study of how dual eligibles with HIV/AIDS would fare under Medicare
    Part D that to this date has not been released publicly. Better
    monitoring of the dual eligible population is needed along with
    stronger protections to ensure that they maintain reliable access to
    lifesaving drug therapies.
        What follows are key findings from the joint AAHIVM and HIVMA
    survey of HIV medical providers.
    Medicare Part D Drug Plans are not meeting the needs of beneficiaries
            with HIV/AIDS.
          83% of respondents reported that their patients had
    experienced problems getting their prescriptions since joining a
    Medicare drug plan. Of those reporting problems for their patients with
    HIV/AIDS:
          80% reported one or more of a patient's drugs were
    subject to prior authorization.
          76% reported one or more of a patient's drugs were not
    covered by their plan's formulary.
          73% reported that patients could not afford the co-
    payments/cost-sharing.
          44% reported that a patient's drugs were subject to
    quantity limits.
    People with HIV/AIDS experience lapses in medications due to Part D
            problems.
          Of those reporting problems with Part D, 75% reported
    that patients with HIV/AIDS went without medications due to Part D
    problems. Of those who reported specific medication lapses:
          Sixty-five percent reported patients with HIV/AIDS going
    without antiretrovirals as well as other medications.
          Eleven percent reported patients with HIV/AIDS going
    without only antiretrovirals
          Twenty-four percent respondents reported patients with
    HIV/AIDS going without only non-antiretroviral medications.
    Problems with Part D coverage led to unscheduled medical visits and
            other adverse health consequences for some patients.
          Sixty percent of respondents who reported problems
    indicated that patients with HIV/AIDS came in for unscheduled or extra
    medical visits due to Part D problems.
          Twenty-eight percent of respondents who reported problems
    indicated that patients with HIV/AIDS experienced other adverse health
    consequences due to Part D problems.
          For those who reported problems, the percentage of
    respondents reporting that patients with HIV/AIDS had trouble accessing
    medications included: antiretroviral medications (54%); mental health
    medications (55%); cholesterol medications (55%); pain medications
    (46%); medications for HIV-related opportunistic infections (36%);
    hypertensive medications (35%) and hepatitis medications (22%).
    II. Protections for HIV Antiretrovirals and other drugs under the Six
            Protected Classes
        CMS has included antiretrovirals as one of six protected drug
    classes for which Part D plans are required to cover ``all or
    substantially all drugs'' available. The formulary guidance prohibits
    plans from applying utilization management techniques such as prior
    authorization to HIV antiretrovirals with the exception of one drug,
    enfuvirtide. Prior authorization is allowed with enfuvirtide only when
    the patient is new to the drug. Despite the guidance, not all
    beneficiaries are guaranteed access to these drugs as evidenced by the
    AAHIVM/HIVMA survey findings and reports from HIV medical providers.
    Just this past week, Dr. Michael Wong in Massachusetts reported a
    patient who was denied stavudine, a common antiretroviral, at the
    pharmacy subject to a prior authorization. The patient has been on this
    medication for years, and Dr. Wong reported that this has never been an
    issue before. The patient has end stage renal disease, is on dialysis,
    and has been on his current ARV regimen for at least a year without
    problems. Cindy Zoellner, PharmD and HIV Clinical Pharmacy Specialist
    in Dallas, Texas reported a similar problem with coverage of darunavir
    in her clinic. The plan faxed her the prior authorization form, which
    required 13 pages of documentation, including office notes, labs, and
    genotype test results. Both health plans were in clear violation of the
    guidance. My colleagues and I have seen other surprises as well, such
    as the denial of fixed-dose combination drugs such as Truvada
    (combination of tenofovir and emtricitabine), Combivir (zidovudine and
    lamivudine), and Epzicom (abacavir and lamivudine) to name a few. The
    individual component agents are approved, but these combinations that
    are designed to improve the ease of administration and minimize pill
    burden are not consistently included in many Part D plans.
        In spite of needed improvements, the protection for these six
    classes is essential for Medicare beneficiaries but is currently only
    offered as guidance issued by CMS and must be renewed annually. My
    colleagues and I, the American Academy of HIV Medicine, and the whole
    of the HIV Medicare & Medicaid Work Group, urge Congress to write into
    law the protections for the six classes including HIV antiretrovirals
    that are currently offered in guidance. In seeking codification of
    these protections, we are united with a wide range of national
    organizations working to secure access to medications essential in the
    treatment of serious diseases. These groups include the AIDS Institute,
    the American Academy of Neurology, the American Psychiatric
    Association, the Cancer Leadership Council, the Epilepsy Foundation,
    the HIV Medicine Association, Mental Health America, the National
    Alliance of State and Territorial AIDS Directors, the National Alliance
    on Mental Illness, Project Inform, and the TEN Project. In addition,
    drug plans that consistently violate this provision should be viewed as
    unfit to participate in the Medicare Part D program. These classes of
    drugs all represent treatment for very serious conditions and in the
    case of HIV--life-threatening illnesses. This protection is critical to
    patients.
    III. Coverage for New HIV Antiretrovirals
        Newly approved antiretrovirals (as well as drugs in the other
    protected classes) are subject to an expedited 90-day review process to
    be added to patient formularies but for a patient who has exhausted all
    currently available medication options, 90 days is too long to wait. By
    virtue of qualifying for Medicare, a majority of Medicare beneficiaries
    with HIV/AIDS are in advanced stages of disease progression and,
    therefore, more treatment experienced than persons with HIV/AIDS who do
    not qualify for Medicare. They are more likely to be resistant to
    available antiretroviral therapies, which mean that available drugs are
    no longer effective at suppressing HIV. Antiretroviral agents newly
    approved by the Food and Drug Administration (FDA) may be essential for
    many Medicare beneficiaries to maintain an effective anti-HIV treatment
    protocol.
        Newly approved medications in the six protected classes, including
    anitiretrovirals, should be added to all drug plans formularies within
    30 days of FDA approval to ensure Medicare beneficiaries have access to
    new HIV therapies that could literally save their lives
    IV. Cost sharing
        People living with HIV/AIDS generally depend on access to 8 to 14
    prescriptions a month to suppress HIV, manage treatment side effects
    and manage co-occurring conditions. Co-payments and other forms of cost
    sharing, disproportionately burden people who are the sickest, the most
    in need of drugs and struggling to live on very low monthly incomes
    that range from $600 to $1,200. For the poorest of patients, even co-
    payments as low as $3.10 to $5.35 per prescription can add up to $50 to
    $60 a month that they just do not have, forcing them to make difficult
    choices between food, shelter and lifesaving health care and treatment.
        For patients with income just above the eligibility requirement for
    the low-income subsidy, the cost-sharing required for their HIV drugs
    can impede access to vital medications. As an example of the co-
    payments borne by those who do not qualify for the low income subsidy,
    let me outline drug costs for a typical, and relatively simple, HIV
    regimen under the Humana Standard Plan (which is comparable to the
    other plan options) available in California. The cost sharing before
    the patient has met the deductible and again during the donut hole
    would be around $819.60 per month (353.19 for Combivir and 466.41 for
    efavirenz); after the patient meets the deductible and before he
    reaches the donut hole the cost would be $204.90 per month (88.30 for
    Combivir and 116.60 for efavirenz). Finally, when the patient's drug
    costs reach the out of pocket limit of 3,850, the patient's co-payments
    drop to $40.98 ($17.66 for combivir and 23.32 for efavirenz). These
    costs are in addition to the premiums charged by the plan. Our patients
    in California and about half of the states often can get help through
    their AIDS Drug Assistance Program (ADAP) with these costs, if they
    qualify for the program. This assistance, however, is not readily
    available in every state, or for every person that might apply.
        Congress should consider capping the beneficiary's mothnly cost
    sharing burden, particularly for those low-income patients who cannot
    afford co-payments for multiple medications.
    V. Enrollment issues: Proper LIS assignment
        Enrollment into a prescription drug plan has been difficult for
    many populations of individuals, but we also have stories to report
    from within the HIV population--not just enrollment, but dis-enrollment
    as well. Earlier this spring, one company, Sierra Rx, abruptly dis-
    enrolled hundreds of HIV patients from coverage their enhanced plan (a
    plan offering coverage on brand and generic drugs through the coverage
    gap or donut hole in exchange for a higher monthly premium. The plan
    made this ``mistake'' ironically after it was widely reported that the
    enhanced plan, an attractive option for patients with HIV, who
    routinely hit the hole in March or April every year, had severe losses
    during the first three months of operation. The dis-enrollments were
    unjustified and after time-consuming case-by-case investigations by CMS
    which found no cause for the abrupt dismissal, CMS mandated re-
    enrollment for virtually all of the clients that had been dis-enrolled.
    In several states the ADAPs stepped in and provided medications while
    CMS was reviewing cases, but the process and was extremely time-
    consuming and frustrating for clients and case managers. If ADAPs had
    not been able to intervene to ensure coverage of essential drugs during
    this period of disruption the patients could have faced drug resistance
    problems, increased disease morbidity, and other severe problems
    associated with loss of access to HIV medications.
        In California where I am from and in some other states as well,
    many Medicare beneficiaries with AIDS are eligible for Medicaid through
    their state Medicaid ``medically needy'' or ``spend down'' program.
    These programs allow people to qualify for Medicaid coverage because
    their medical expenses are so high that when deducted from their income
    they meet the Medicaid income eligibility criteria. Under current
    policy, CMS only automatically enrolls people into the low-income
    subsidy program who have met the Medicaid spend down requirement during
    specific ``snapshot'' months of the calendar year. This policy results
    in denying access to many who are truly ``medically needy'' but have
    lower countable expenses in a CMS ``snapshot'' month. Fairness and
    efficiency support enactment of a federal policy that grants access to
    the low-income subsidy to any person whom a state Medicaid program has
    certified as a Medicaid-eligible. With such a policy, those who are
    truly unable to meet the cost sharing required under Medicare Part D
    will have access to a low income-subsidy and the life-saving
    prescription drug coverage they need.
    VI. ADAP and TrOOP
        Many Medicare beneficiaries with HIV/AIDS relied on the Ryan White
    CARE Act's AIDS Drug Assistance Program (ADAP) for drug coverage prior
    to Medicare Part D. Beginning in January 2006, ADAPs were required to
    enroll all eligible ADAP beneficiaries into Medicare Part D. The U.S.
    Department of Health and Human Services determined that ADAP
    expenditures could not count toward the true out of pocket cost limit
    known as ``TrOOP''. Meeting or paying ``TrOOP'' expenses is the trigger
    that moves a beneficiary from the coverage gap into a meaningful level
    of drug coverage, known as catastrophic coverage. Therefore,
    beneficiaries receiving support from ADAPs will never reach a
    meaningful level of drug coverage if the ADAP supplements their
    coverage during the donut hole. ADAP dollars that must be used to
    supplement Medicare are dollars that cannot be allocated to other needy
    individuals who do not have Medicare coverage. Federal policy should
    support efforts to maximize Medicare coverage to meet the needs of
    Medicare beneficiaries with HIV/AIDS. Our organizations urge Congress
    to clarify the law to allow expenditures made by AIDS Drug Assistance
    Programs (ADAPs) to count toward the True-Out-of-Pocket (TrOOP) limit.
    VII. Conclusion:
        Medicare Part D has been helpful to a few of my patients, yet for
    many, if not most others, it has been confusing, stressful, and
    disruptive to their care. From the HIV medical provider perspective, it
    has been challenging on the best of days, outrageous on the worst. We
    spend hours on the phone or at our desks on a daily basis, filling out
    prior authorization request for many different plan and for numerous
    medications. We often act as the only advocate for patients who
    otherwise haven't been heard or cannot navigate the very difficult
    system. It is not clear how many patients fall through the cracks in
    this system, but we fear that for every one we hear about, there is at
    least one other who we don't. The hours spent on patient advocacy are
    robbed from our limited time for delivering care, and it is this
    complicated and time consuming bureaucracy that is inadvertently
    perpetuating the healthcare disparities that plague this very
    vulnerable population.
        Congress has an opportunity to help, by codifying the six protected
    classes, increasing surveillance and sanctioning of bad actors, capping
    monthly cost-sharing, guaranteeing at least one enhanced plan that
    offers coverage of both brand name and generic drugs through the
    doughnut hole, and by allowing ADAP expenditures to count towards
    TrOOP.
        I appreciate the opportunity to share my story and the stories of
    my colleagues and I remain eager to assist this body in the design of
    possible solutions.
        Thank you.

        Chairman STARK. Thank you.

            r. Fleming.

    STATEMENT OF WILLIAM FLEMING, PharmD, VICE PRESIDENT, PHARMACY
                 AND CLINICAL INTEGRATION, HUMANA, INC.

        Mr. FLEMING. Mr. Chairman, Representative Camp and
    Committee Members, thank you for asking me to testify about
    Part D program protections for beneficiaries. I am William
    Fleming, a pharmacist and vice president of pharmacy for
    Humana. Humana offers three uniform stand-alone PDPs in all 50
    States, here in D.C. and one in Puerto Rico. We have over 4.6
    million Medicare members, including over 1.1 million subsidized
    members. Our members have access to an open formulary of all
    Medicare covered drugs through over 60,000 pharmacies and our
    own mail order. In 2007, we expect to pay for nearly 200
    million prescriptions or nearly $11 billion of drug costs. Let
    me highlight a few beneficiary protections.
        First, we provide local pharmacy access. In 2006, we added
    5,400 independent pharmacies to our network, bringing the
    number of independents to one-third of the total. We pay for
    pharmacist consultations and have electronic funds transfers to
    ensure prompt payment.
        Second, we help members better understand and use their
    plan. We design tools to educate beneficiaries on how to pick
    the plan that is right for them, compare drug costs, learn
    about their drugs, consult with their physicians on
    alternatives that can save money and help them improve their
    health. We send members messages about when they receive their
    ID cards, when they are nearing the coverage gap and whether
    there are clinically effective cost-saving generic alternatives
    to the brand drugs prescribed. We made over 750,000 calls to
    notify members about generic alternatives. We work with
    physicians, pharmacies, care givers, consumer groups and
    government agencies to maximize resources to improve health
    outcomes.
        Regarding SmartSummaryRx, which is in your packet, to help
    members maximize their coverage and have confidence to talk
    with their doctors, we designed SmartSummaryRx. Members who
    receive this monthly statement, it tracks their drug usage and
    costs, the doctors who prescribe the drugs, members who are
    compliant on their medications, whether savings are available
    and provides personalized wellness information. This helps them
    become more informed consumers. We also provide a record of the
    drugs they use. Smart Summary acts as a portable personal
    health record and assists doctors in coordinating medications
    for our members.
        Regarding formulary, all Medicare covered drugs are on our
    formulary. We negotiate directly with drug manufacturers and
    retailers. We have four drug coverage tiers. We require prior
    authorization, safety and quantity limits and step therapy in a
    small number of drugs to guide to equally effective less-costly
    therapies. We encourage the use of generics, mail order and 90-
    day at retail purchasing.
        Regarding exceptions and appeals, during 2006, we processed
    appeals for less than 1 percent of claims, mostly for directly
    marketed, brand name drugs or to determine coverage under part
    B or Part D.
        Regarding outcomes, we are working to improve quality
    outcomes through the medication therapy management programs
    working with 32 quality improvement organizations and
    supporting efforts to promote research. Medication therapy is
    required for all beneficiaries with high drug cost and multiple
    chronic conditions that use multi-chronic medications. One
    million Humana members qualify for this program and receive
    general mailings, telephone and face-to-face counseling with a
    pharmacist on potential adverse reactions, drug interaction
    issues or compliance with a doctor's orders. We intend to make
    it available to other members in the future.
        Regarding areas for consideration, there are some areas
    where the program should be improved. Number one, Medicare part
    B versus Part D drug coverage: Certain categories of drugs may
    be covered under part B or Part D, depending on the setting
    and/or the clinical situation. MEDPAC just made three
    recommendations. We agree with all of them.
        Number two, coverage of Part D excluded drugs: Two types of
    drugs, the benzodiazepines and the barbiturates are covered by
    Medicaid. Part D low-income beneficiaries have access to these
    drugs. We believe that all beneficiaries should have access to
    keep costs down and provide other treatment options for
    diseases like epilepsy.
        Number three, Social Security Administration deductions:
    Thousands of beneficiaries will still have issues with
    incorrect Social Security premium deductions. This issue must
    be resolved between CMS and Social Security. We provide
    hardship waivers to low-income members who continue to
    experience problems.
        In conclusion, most beneficiaries now have some form of
    prescription drug coverage, the majority of whom are satisfied
    in saving money. But improvements can be made. At Humana, we
    support strong beneficiary protections to educate, improve
    health options and resolve beneficiary concerns. I look forward
    to responding to your questions.
        I would like at this time to briefly respond to a question
    Congressman Kind raised regarding a Humana beneficiary. We
    deeply regret that this situation occurred. Our procedures do
    not turn cases like this over to collection agencies, not for
    100-year olds or for 65-year olds. That was wrong. I know that
    your office called us and that the issue was resolved. We have
    talked to the member. We are not perfect and constantly work to
    improve our training to prevent these types of cases from
    occurring again. Thank you.
        [The prepared statement of Mr. Fleming:]

      Statement of William Fleming, PharmD, Vice President, Pharmacy and
               Clinical Integration, Humana, Louisville, Kentucky

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        Chairman STARK. Thank you.
        Mr. Precht.

      STATEMENT OF PAUL PRECHT, POLICY DIRECTOR, MEDICARE RIGHTS
                                 CENTER

        Mr. PRECHT. I am Paul Precht, deputy policy director for
    the Medicare Rights Center. Thank you for this opportunity to
    testify on the protections for people with Medicare under the
    Part D prescription drug benefit.
        The written testimony we have submitted describes where
    these protections fall short and makes specific recommendations
    for actions that Congress can take to strengthen them. All
    these recommendations are drawn from the experiences of the
    caseworkers at the Medicare Rights Center. Our case workers
    have been helping people with part D problems over the last
    year and a half, whether it is appealing a plan's coverage
    denial so they can receive the drugs they need or securing
    enrollment in a plan that best meets their needs. These cases
    are by their very nature what social scientists call anecdotal,
    although the people we help, people who are very sick and
    desperate to receive the medical care they need, certainly
    would not describe their ordeals as anecdotes.
        In preparation for this testimony, however, I wanted to
    ensure that the enrollment problems our clients are
    experiencing are not just isolated incidents. So, I reviewed a
    report by the Oklahoma Insurance Department that systematically
    examines the market conduct of a company that is one of the
    largest purveyors of both Part D and Medicare advantage plans.
    What I read exactly mirrors the experience of the people we
    help.
        The most common story is this. Someone seeking to enroll in
    a stand-alone drug plan is signed up by a sales agent for an
    HMO or other Medicare advantage product. When they discover the
    change to their coverage, usually when they receive a medical
    bill, they call 1-800-MEDICARE to disenroll. Medicare tells
    them to call the plan, but the plan tells them that they can't
    disenroll, that they are locked in for the year. This is
    exactly what the Oklahoma Insurance Commissioner found. When
    the company was presented with evidence of these bate-and-
    switch-tactics, instead of taking action to disenroll the
    victim and put them back in original Medicare, it dismissed the
    complaint as frivolous as an attempt to avoid lock-in.
        Companies should not have the say-so over whether someone
    can obtain a special enrollment period, which all victims of
    marketing abuse are entitled to under CMS guidance. But people
    with Medicare have no due process protections, no rights to
    appeal for an independent review of Part D and Part C
    enrollment decisions that are made either by plans or by CMS.
    Even when the victims of fraudulent marketing get help from the
    Medicare Rights Center or another trained counselor to obtain a
    retroactive reinstatement in original Medicare, a process
    necessary to get medical bills properly covered, it can take
    months for CMS to process.
        We are encouraged that the agency is working to expedite
    this process. We remain convinced that fair and efficient
    resolution of enrollment problems must be available to all
    people with Medicare, not those lucky enough to have a
    counselor with contacts at CMS regional offices who is
    advocating on their behalf. The surest way for Congress to
    accomplish that is to lift the lock-in that prevents people
    from changing their Part D or Medicare advantage plan during
    the course of the year. We receive numerous calls from Part D
    enrollees who are dismayed to discover in January, after they
    were locked in for the year, that the premiums, drug coverage
    or copayment of the plan they chose the previous year had
    changed.
        The annual notices have changed. Even if they are received
    in time, they are so complex as to be indecipherable. We have
    recommended that CMS require plans to personalize these annual
    notices of change. Plans have the capability, and all you have
    to do is to look at Humana's documents that they send out every
    month to know that they can in fact get personalized
    information. The reality is that most people learn about
    premium increases when they get their bill and about coverage
    changes when their prescription is rejected at the pharmacy
    counter. Lifting lock-in or at least extending open enrollment
    for the first 3 months of the calendar year when changes to
    Part C coverage are still allowed would allow people with
    Medicare to choose their drug plan once they know what the real
    deal is.
        People with Medicare and Medicaid and other recipients of
    the low-income subsidy do have the right to change plans during
    the course of the year, but these individuals are more likely
    to have cognitive or mental impairments, low health literacy
    levels and to live alone, isolated from anyone who can help
    with plan selection. As a result, most do not exercise their
    option to change plans and remain in the one they were assigned
    by CMS, an assignment that was made at random without regard to
    matching drug regiments and formulary coverage. Next year,
    experts project between one and two million of these low-income
    people with Medicare will be randomly reshuffled among the Part
    D plans that qualify for a full premium subsidy. After changing
    their drug regiments to comply with their current plan's
    formulary restrictions, these individuals will again have to
    change the drugs they take to accommodate the new plan's
    formulary. We can avoid such disruptions to the medical care of
    this vulnerable population.
        A number of States have matched the drug regiments of the
    members of their pharmaceutical assistance programs when
    selecting the Part D plans for these residents. Researchers
    with the Medicare payment advisory commission have concluded
    that this is a viable option for the annual reassignment of
    dual eligibles and other low-income Part D enrollees. It
    requires a statutory change, however, since random plan
    assignment is written into the law.
        Thank you, again, for this opportunity to testify. We
    believe the experience over the first year and a half of the
    Medicare drug benefit point to some concrete practical ways to
    improve the consumer protections under Part D, and we stand
    ready to work with Committee Members of both parties on
    enacting such improvements.
        [The prepared statement of Mr. Precht:]
       Statement of Paul Precht, Policy Director, Medicare Rights Center
        Thank you Chairman Stark, Ranking Member Camp, distinguished
    members of the House Ways and Means Health Subcommittee, for holding
    this hearing on the consumer protections for people with Medicare under
    the Part D prescription drug benefit.
        Unlike the hospital and outpatient medical benefits available under
    Medicare Parts A and B, prescription drug coverage is available only
    through private companies. There is no option to receive prescription
    drug coverage directly through Medicare. Instead of providing this
    option and using the purchasing power of 43 million people with
    Medicare to lower prescription drug prices, Congress established a
    system of private Part D plans which are at risk for the drug spending
    of their enrollees, a powerful incentive to hold down usage.
        When enacting Part D in 2003, Congress recognized the financial
    incentives Part D plans have to restrict access to expensive
    medications and to discourage enrollment by people with Medicare who
    have high prescription drug costs. Congress therefore established a
    number of consumer protections under Part D that provide the right of
    appeal when Part D plan denies coverage for a prescription drug, that
    prohibit plans from designing formularies that discriminate against
    people who need high-cost drugs, and that ensure all people with
    Medicare, especially low-income older adults and people with
    disabilities, have access to coverage under a Part D plan. These and
    other statutory protections are vital to ensure Part D guarantees
    access to the prescription drugs people with Medicare need to stay
    alive and healthy. The experience over the first 18 months of the Part
    D benefit, however, shows that these consumer protections fall short.
    Legislation is needed to ensure both the Part D plans and the Centers
    for Medicare & Medicaid Services (CMS) fulfill Congress' intent to
    provide meaningful consumer protections that guarantee access to
    quality, affordable drug coverage for people with Medicare.
        Founded in 1989, the Medicare Rights Center is the largest
    independent source of information and assistance for people with
    Medicare. Since January 1, 2006, our case workers and volunteers have
    worked overtime helping people with Medicare deal with problems with
    the Part D prescription drug benefit. The problems fall into three
    broad categories:

          Problems securing and maintaining enrollment in the Part
    D plan that best suits their needs;
          Problems accessing affordable medicines under the low
    income subsidy, or Extra Help, program;
          Problems obtaining coverage for the medicines they need
    once they are enrolled in a Part D plan.
    Enrollment
        One of the most persistent and frustrating problems is the
    continuing inability of the computer systems used by CMS, the Social
    Security Administration (SSA) and the Part D plans to consistently and
    accurately transmit information on enrollment, premium and low-income
    status to each other. This information sharing is critical to ensure
    the correct premium for the right Part D plan is deducted from an
    individual's Social Security check and enrollment in the low income
    subsidy is reflected in the premium and cost sharing charged by the
    Part D plan.
        Recently, we have been working to prevent people with Medicare from
    being dropped by their Part D plan for nonpayment of premiums. These
    individuals are having Part D premium deducted from their Social
    Security checks, but because of these systems problems, premiums are
    not finding their way to the Part D plans. We have been told repeatedly
    by CMS that these systems problems will be resolved ``soon'' but the
    resolution date has repeatedly slipped. Many of our clients are on low,
    fixed incomes. They cannot afford to have a premium deducted each month
    from their Social Security check, sometimes for a more expensive Part D
    plan that they quit last December, and also write a monthly check to
    their new Part D plan.
        They should not have to. In fact, CMS told plans in March that they
    cannot disenroll individuals for nonpayment of premiums if the fault
    lies in these systems problems that fail to transmit funds deducted
    from Social Security checks to the correct plan. Despite this guidance
    from CMS, plans are still threatening to disenroll these individuals.
    This is one of the many areas where stronger oversight and enforcement
    by CMS of plan behavior is necessary.
        Here is the story one person submitted to the Medicare Rights
    Center:
        I am writing on behalf of my 91-year-old mother, a California
    resident. Funds are being withdrawn in error out of her monthly social
    security check since January 2007. After 5 months of repeated phone
    calls, we still can't get anyone to accept responsibility and it still
    remains unresolved. Below is a brief summary of the steps we have
    taken.
        In December, 2006, Medicare was notified that Mom dropped Humana
    Part D Drug Coverage and switched to SierraRx due to Humana raising
    their rates from $50.90 to $80.90.
        Since January 2007, $80.90 has been erroneously deducted each month
    from Mom's Social Security check through May 2007. In addition, Mom is
    paying her own SierraRx monthly fees by check.
        I spoke to Social Security Security and they said there is nothing
    they can do. We were told by Humana in April that Social Security had
    updated its files, but $80.90 was again withdrawn for May's check. This
    has caused much emotional and financial stress.
        Our caseworkers also handle a number of enrollment cases that are
    the fallout of aggressive and deceptive marketing, generally of
    Medicare Advantage plans that include the prescription drug benefit.
    The victims of such marketing abuses often need to retroactively
    disenroll from their MA plan in order to get Original Medicare to pay
    for medical care that the plan refuses to cover. They also have to
    return to the Part D plan they had previously through a Special
    Enrollment Period that is allowed for victims of marketing abuse. Even
    our experienced caseworkers can experience difficulty getting CMS
    regional offices to process these enrollment transactions. Although
    some CMS staff members are responsive, in other instances, MRC
    caseworkers must hound the regional office to process the enrollment
    and disenrollment while our clients wait months to get their Part D and
    Medicare coverage rectified.
        The situation is even worse for the vast majority of people with
    Medicare that do not receive assistance from an MRC caseworker, a
    counselor with a State Health Information and Assistance Program or
    from the constituent services staff of their congressional
    representative. Our clients report being told by operators at 1-800-
    Medicare to ``call your plan'' when they seek to disenroll after being
    duped into a Medicare Advantage plan. When they call the plan, however,
    they are told that they cannot disenroll, that they are locked in, even
    though individuals who are the victims of marketing abuse are entitled
    to a special enrollment period.
        There is a common thread underlying all these enrollment problems.
    There are no due process protections for enrollment decisions under
    Part D or under the Medicare Advantage program. An individual dropped
    from their Part D plan for nonpayment of premiums who can show the
    premiums were deducted from her Social Security check has no guarantee
    of an independent review that could reinstate coverage. Someone seeking
    reinstatement in a Part D plan and disenrollment from a Medicare
    Advantage plan has no recourse if CMS officials do not believe she was
    victimized by fraudulent or deceptive marketing. Congress should enact
    due process protections that govern enrollment decisions made by CMS
    and Part D plans. It's common sense, basic fairness and a requirement
    of constitutional law.
        We also recommend that Congress lift lock-in for the Part D and the
    Medicare Advantage programs, a broader solution that would help resolve
    these and other Part D consumer problems. Last winter, a number of
    clients reported that they had not received notice from their Part D
    plans about premium increases, formulary changes or curtailments to the
    coverage in the doughnut hole. These complaints focused on a far wider
    array of plans than the single company CMS identified publicly as
    failing to send out its annual notice of change in time. By the time
    consumers discovered the changes to their coverage, it was too late.
    They were barred by the statutory lock-in provision from changing their
    Part D plan.
        Because of the way enrollment periods are structured, however,
    these clients did have the ability to change their Part D coverage, but
    only if they traded a stand-alone drug plan for a drug plan that came
    with a Medicare Advantage plan, a so-called MA-PD. Congress should
    align the enrollment periods, extending the ability to change Part D
    plans into the first three months of the calendar year. This will
    provide people an opportunity to change plans once they have become
    aware, at the pharmacy counter and through the bills they receive, of
    how coverage in their Part D plan has changed. There is no reason why
    someone can change Part D coverage only when one of the parties to the
    transaction is a Medicare Advantage plan, but not when the change is
    between stand-alone Part D plans. This extended enrollment period will
    also provide make it easier for the data exchange systems to
    accommodate enrollment decisions made just days before the December 31
    deadline.
        Any steps Congress takes to add flexibility to the Part D
    enrollment process will help people with Medicare who find it difficult
    to select among multiple plans, each with different formularies, cost
    sharing, premiums and drug prices. Both drug prices and formularies can
    change at any time during the year, as of course can the medical
    condition and the need for specific medicines, of a Part D enrollee.
    Lock-in removes the ability of most consumers to respond to those
    changes after January 1.
        Many people with Medicare, especially, but not exclusively,
    individuals with cognitive impairment or low levels of literacy, are
    unable to conduct the formulary review and on-line price comparison
    necessary to make an informed selection of a Part D plan. Congress
    recognized this reality when it provided for automatic Part D
    enrollment for individuals transitioning from Medicaid to Part D drug
    coverage. CMS extended that process by ``facilitating'' enrollment of
    all individuals receiving the low income subsidy who have not made an
    independent plan selection.
        Assignment of plans under automatic enrollment, however, is
    completely random, with no regard given to whether the assigned Part D
    plan covers the drugs of its new enrollee. Many of the coverage
    problems that people experienced at the start of Part D in 2006 are
    attributable to this random assignment. Matching drug regimens with
    plan formularies is a more sensible approach, but random assignment of
    dual eligibles is written into the Medicare statute. A number of states
    use formulary criteria in assigning plans for members of their state
    pharmaceutical assistance commissions and through these efforts were
    able to match individuals with plans that covered their drugs, the same
    process that informed consumers use in their plan selection.
        Random reassignment of people with Medicare receiving the low
    income subsidy is slated to occur on an annual basis, as plans that
    received auto enrollments in one year find their Part D premium is
    above the regional low income benchmark, which is based on average Part
    D premiums charged by Part D and MA plans in the area. CMS minimized
    the number of low income people subject to random reassignment by using
    its demonstration authority to change how the low income benchmark was
    calculated in 2007. As CMS phases-in the benchmark setting formula set
    by statute, millions of low income subsidy recipients are likely to be
    randomly reassigned to new plans, with different formularies, on an
    annual basis. Congress should amend the law to require CMS to match
    drug regimens and formularies in effecting these reassignments.
    Low Income Subsidy
        Changing Part D plans, either on a voluntary basis or by random
    reassignment, often interrupts access to affordable medicines for low
    income individuals because systems problems prevent the record of
    enrollment in the low income subsidy from traveling with the individual
    when they change plans. This means that the individual may face a $265
    deductible or a high copayment instead of the copayments of 5 or less
    that are set by statute. For individuals living on low, fixed incomes
    this can put vital medicines for treating hypertension or controlling
    seizures out of reach.
        Although this problem is rooted in the systems problems it is
    compounded by a persistent failure of Part D plans to comply with CMS
    guidance requiring plans to accept ``best available evidence'' of
    enrollment in the low income subsidy. What this policy should mean is
    that an individual can present her Medicaid card or LIS award letter
    from SSA at the pharmacy, the pharmacist will inform the Part D plan
    customer service center of the customer's LIS status, and the plan
    customer representative will fix it so the electronic billing
    transaction between plan and pharmacy charges the appropriate copayment
    for an LIS recipient. However, our clients often experience a flat out
    refusal by plan customer service representatives to charge the
    appropriate copayment, even when a pharmacist or MRC case worker
    explains the requirements laid out in CMS guidance. Improved oversight
    and enforcement by CMS are needed in this area as well.
    Part D Appeals
        Part D plans are given wide latitude to decide what drugs they will
    cover and what restrictions they will place on the drugs they do cover.
    To protect access to medically necessary drugs, Congress established an
    appeals process. Since the start of the Part D benefit, the Medicare
    Rights Center has helped hundreds of individuals navigate the appeals
    system and obtain coverage for the medicines they need. In our
    experience, the Part D appeals system is cumbersome, unfair and
    vulnerable to obstructionist tactics by Part D plans.
        The appeals process usually breaks down before it starts, when the
    consumer obtains a rejection at the pharmacy counter. Many consumers
    are never notified of their appeal rights because CMS has failed to
    articulate and enforce regulations that would ensure people with
    Medicare are notified of their rights. We recommend that Congress
    direct CMS to require that Part D plans and their pharmacies provide a
    written explanation at the pharmacy of why coverage of why their
    prescription has been denied, an explanation of their appeals rights
    and the necessary contact information to begin the appeals process.
    Without such notice, the Part D appeals process will remain little more
    than a fiction.
        After having a prescription rejected at the pharmacy counter, a
    consumer must then call the Part D plan to obtain an exception, also
    known as a coverage determination. At that point, the consumer must
    convince her doctor to write to the plan to explain why the prescribed
    drug is medically necessary. Not only are doctors not paid for this
    task, they often must deal with plans that refuse to explain the
    criteria used for obtaining coverage. In fact, only last week did CMS
    clarify that Part D plans must provide this information to doctors.
        If the plan affirms its initial denial of coverage, consumers must
    ask the plan a second time for coverage ``redetermination,'' often
    after they have already engaged in a back-and-forth between their
    doctor and the plan for more information. CMS statistics show that
    plans deny 95 percent of redeterminations but that a majority of these
    redeterminations are overturned through independent review. We
    recommend that Congress simplify the appeals process by requiring the
    initial rejection at the pharmacy to count as the first coverage
    determination. Consumers would ask their plans one time for a coverage
    ``redetermination,'' before proceeding to an independent review.
    Congress can also help secure the participation of doctors in the
    appeals process by allowing them to represent their patients at the
    redetermination and independent review stages without securing an
    appointment to represent their clients.
        The Medicare Rights Center wins most of the cases once we obtain an
    independent review of the plans' coverage denial, with the exception of
    appeals for coverage of drugs prescribed for off-label indications,
    indications other than those approved by the Food and Drug
    Administration. CMS' interpretation of the statute defines a medically
    accepted indication only as one that is specified on the label or an
    off-label use that is referenced in one of three medical compendia. If
    the prescription is off-label but not included in the specific
    compendia, Medicare Part D will not provide coverage, even if the usage
    has been shown effective in peer-reviewed clinical literature, the
    standard that applies for Part B drugs. We urge Congress to clarify the
    Part D statute so that the definition of medically accepted indication
    is consistent with Part B and our clients can obtain coverage for drugs
    that have proven effective in treating their condition. The story of
    one of our current clients shows why Congressional action is necessary.
        Mr. H, a U.S. Air Force veteran, was severely injured in a tornado
    in 1997. As a result, he had to undergo removal of his left eye,
    removal of portions of the left frontal lobe of his brain, and
    extensive cranial facial reconstruction.
        Mr. H has worked to manage his pain with his prescribing physician,
    a board-certified pain management specialist. For six years, under the
    supervision of his physician, Mr. H successfully used Actiq, a medicine
    approved by the FDA for treatment of breakthrough pain for cancer
    patients, to manage his migraines and reduce his risk of seizing.
    Before the enactment of Medicare Part D, Mr. H received coverage for
    Actiq under his state's Medicaid program, TennCare. Initially, his Part
    D plan covered Actiq, but in October 2006 Mr. H was suddenly told by
    his pharmacist that the drug would no longer be covered. Because Actiq
    was being prescribed for an off-label indication, it was not considered
    a medically accepted indication under Part D.
        Mr. H's doctor prescribed Fentora, also approved for treating
    cancer-related pain, as a replacement. Recently published peer-reviewed
    literature has demonstrated that Fentora is a safe and effective method
    of treating neuropathic pain and the drug has proven successful at
    easing Mr. H's pain. Initially, Mr. H's Part D plan covered Mr. H's
    Fentora prescription, but in January 2007, the plan ended this coverage
    without prior notification to Mr. H or a transition fill.
        Since Humana stopped covering his Fentora prescription, Mr. H has
    been forced to go without treatment because he cannot afford to pay
    out-of-pocket. When Mr. H had access to his Fentora prescription, he
    experienced only one seizure per month; without this prescription, he
    now experiences approximately four seizures every week. As a result,
    Mr. H must now make frequent trips to the emergency room. This pain
    hampers every aspect of his life, including his ability to interact
    with his family and complete daily tasks.
        Because Medicare Part D regulations do not allow for consideration
    of peer-reviewed medical literature, Mr. H's appeals to for coverage to
    both his plan and the independent review entity were unsuccessful. On
    Mr. H's behalf, MRC has submitted a request for review of this decision
    by an Administrative Law Judge, and we are currently waiting for a
    hearing to be scheduled.
        We believe the experience of people with Medicare over the first
    year-and-a-half of the Part D benefit should guide Congress' efforts to
    improve consumer protections. We recommend that Congress take action to
    streamline the Part D appeals process and ensure access to medically
    necessary drugs, including for off-label uses that have proven to be
    clinically effective. Enrollment protections for people with Medicare,
    including the removal of lock-in for Part D and the Medicare Advantage
    program, should also be enacted. Finally, Congress should direct CMS to
    exercise its oversight and enforcement responsibilities so that the
    protections afforded people with Medicare on paper are in fact provided
    by the Part D plans. The Medicare Rights Center stands ready to work
    with members of both parties on making stronger Part D consumer
    protections a reality.

        Chairman STARK. Thank you, Mr. Precht.
        Mr. Maher.

         STATEMENT OF TOM MAHER, REGIONAL DIRECTOR, HEALTHCARE
                 LEADERSHIP COUNCIL AND MEDICARE TODAY

        Mr. MAHER. Chairman Stark, Ranking Member Camp and Members
    of the Subcommittee, thank you for the invitation to join you
    today to discuss the Medicare Part D prescription drug benefit
    and, specifically, the lessons we have learned about outreach
    to beneficiaries about Part D enrollment. My name is Tom Maher,
    and I am representing the Medicare Today partnership, an
    alliance of 400 organizations representing seniors, patients,
    healthcare providers, employers, care givers and many others.
    The members of Medicare Today work with Medicare beneficiaries
    in all 50 States providing information and enrollment
    assistance to literally millions of individuals. As a regional
    director for the initiative, I personally have been involved in
    numerous education and enrollment events in several States in
    the midwest and the northeast.
        To give you an example of the work that we have done in one
    of my States, New Hampshire, we conducted hundreds of outreach
    and counseling events in an effort to reach the roughly 188,000
    Medicare beneficiaries in the State. By January of 2007,
    135,500 had prescription drug coverage ?in the State of New
    Hampshire.?
        This hearing is intended to help policy makers learn more
    about outreach strategies that were most effective in helping
    beneficiaries to make informed Part D enrollment decisions. I
    hope I can shed some light on that issue.
        Before Medicare Today counseled any seniors, we engaged in
    polling and control reaction simulations conducted by the
    Atlanta based Shapiro Public Opinion Research firm. The results
    were illuminating. We learned that, while mass communication
    tools like television advertising and direct mail had their
    uses, there is no substitute for direct one-on-one
    communication between beneficiaries and someone who understands
    and can answer questions about the Part D program. Town hall
    meetings, forums are effective; individual counseling is very
    effective.
        The information gleaned from this study was borne out in
    the field. Even though individuals have received information in
    the mail from Medicare about Part D, this was still a brandnew
    program, and seniors were skeptical as consumers. This
    skepticism is heightened by media stories saying the program
    wouldn't work, it was too complicated and wouldn't save seniors
    any money. A lot of those stories were out there before seniors
    even signed up for Medicare Part D.
        To cut through the skepticism, we worked with community
    institutions, local hospitals, churches, senior centers and
    pharmacies, places where local residents feel comfortable
    attending an educational forum. At these events, we offered the
    opportunity for one-on-one counseling to address concerns,
    answer questions and to give people information they sought and
    needed. It is important to note that none of our Medicare Today
    volunteers, nor to the best of my knowledge, any other
    individuals or organizations that we partnered with were there
    to persuade seniors to enroll in plans. We were there simply to
    provide information on how to enroll, how the program would
    work or works and the coverage and potential savings they might
    see if they signed up. For the vast majority of beneficiaries,
    that is all they needed. We met personally with thousands of
    people who needed to see in black and white that their
    particular drugs would be covered and that they would be able
    to reduce their out-of-pocket pharmaceutical costs. Even in the
    case of people taking a few medications, they were able to see
    they could get protection for the future with low monthly
    premiums. Throughout this process, we worked very closely with
    CMS and the Social Security Administration.
        Mr. Chairman, during those early stages of the Part D
    program, there were bumps in the road when it came to the
    implementation. For a new program of this magnitude, it would
    have been incredibly surprising if everything had run
    perfectly. What needs to be said about the Federal officials
    involved in this program is their responsiveness has been
    exemplary, especially the folks I worked with in the Boston CMS
    office. Whenever we pointed out problems with the enrollment
    process or with the plan finder tool, CMS listened to us and
    took us seriously and acted upon our comments and suggestions.
        Our work is continuing in New Hampshire. We assist newly
    eligible beneficiaries as well as those who have not been
    enrolled and may still have questions about the program. I
    believe we still need intensive outreach to low-income seniors
    who qualify for additional financial assistance. Nationally, 90
    percent of Medicare beneficiaries now have prescription drug
    coverage, and I believe we are on the right track. But we
    should continue to educate and assist low-income seniors. We
    have learned a great deal over the past couple of years. We
    have learned that community partnerships can be effective in
    conducting public program outreach. We have learned that mass
    communication regarding these programs needs to be complimented
    with individual one-on-one counseling.
        The Medicare Today partnership commissioned the American
    Viewpoint Public Opinion Research firm to do a survey of a
    thousand seniors regarding the Part D enrollment process. Asked
    whether enrollment was easy or difficult, 72 percent said very
    or relatively easy, and 89 percent of those who self-enrolled
    said they experienced no problems with the process. We are
    proud of that success rate.
        Mr. Chairman, thank you again for the opportunity, and I am
    happy to answer any questions you may have.
        [The prepared statement of Mr. Maher:]
    Statement of Tom Maher, Regional Director, Medicare Today, Concord, New
                                   Hampshire
        Chairman Stark, Ranking Member Camp and the members of the
    subcommittee. Thank you for the invitation to join you today to discuss
    the Medicare Part D prescription drug benefit and, specifically, the
    lessons we've learned about outreach to beneficiaries about Part D
    enrollment.
        My name is Tom Maher, and 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 worked with Medicare
    beneficiaries in all 50 states, providing information and enrollment
    assistance to literally millions of individuals. As a regional director
    for the initiative, I have personally been involved in numerous
    education and enrollment events in several states in the Midwest and
    northeast.
        To give you an example of the work we've done, in one of my states,
    New Hampshire, we conducted 100s of outreach and counseling events in
    an effort to reach the roughly 188,000 Medicare beneficiaries in the
    state. By January of 2007, 135,500 had prescription drug coverage.
        This hearing is intended to help policymakers learn more about the
    outreach strategies that were most effective in helping beneficiaries
    make an informed Part D enrollment decision. I hope I can shed some
    light on that issue.
        Before Medicare Today counseled seniors, we engaged in polling and
    controlled reaction simulations conducted by the Atlanta-based Shapiro
    Group public opinion research firm. The results were illuminating. We
    learned that, while mass communications tools like television
    advertising and direct mail have their uses, there is no substitute for
    direct one-on-one communication between beneficiaries and someone who
    understands and can answer questions about the Part D program. Town
    meetings and forums are effective. Individual counseling is effective.
        The information gleaned from this study was borne out in the field.
    Even though individuals had received information in the mail about
    Medicare Part D, this was still a brand new program and seniors tend to
    be skeptical consumers. This skepticism was heightened by media stories
    saying the program wouldn't work, it was too complicated, and it
    wouldn't save seniors any money.
        To cut through the skepticism, we worked with community
    institutions--local hospitals, churches, senior centers, pharmacies--
    places where local residents feel comfortable attending an educational
    forum. At these events, we offered the opportunity for one-on-one
    counseling--to address concerns, to answer questions, to give people
    the information they sought and needed.
        It's important to note that none of our Medicare Today volunteers
    nor, to the best of my knowledge, other individuals and organizations
    involved in outreach tried to persuade beneficiaries to enroll in a
    Part D plan. Our approach was simply to provide objective information
    on how to enroll, how the program works, and the coverage and potential
    savings involved.
        For the vast majority of beneficiaries, that was all they needed.
    We met personally with thousands of people who needed to see, in black
    and white, that their particular drugs would be covered and that they
    would be able to reduce their out-of-pocket pharmaceutical costs. Even
    in the case of people taking a few medications, they were able to see
    that they could get protection for the future for low monthly premiums.
        Throughout this process, we worked very closely with the Centers
    for Medicare and Medicaid Services and the Social Security
    Administration. Mr. Chairman, during the early stages of the Part D
    program, there were bumps in the road when it came to implementation.
    For a new program of this magnitude, it would have been incredibly
    surprising if everything had run perfectly. What needs to be said about
    the federal officials involved with this program is that their
    responsiveness has been exemplary. Whenever we pointed out problems
    with the enrollment process or with the PlanFinder tool, CMS listened
    to us, took us seriously, and acted upon our comments and suggestions.
        This work is continuing, as we assist newly-eligible beneficiaries
    as well as those who have not enrolled and may still have questions
    about the program. I believe we still need intensive outreach to low-
    income seniors, who quality for additional financial assistance.
    Nationally, more than 90 percent of Medicare beneficiaries now have
    prescription drug coverage, I believe we're on the right track, but we
    should continue to educate and assist low income seniors.
        We've learned a great deal over the past couple of years. We've
    learned that community partnerships can be effective in conducting
    public program outreach. We've learned that mass communication
    regarding these programs needs to be complimented with individual, one-
    on-one counseling. The Medicare Today partnership commissioned the
    American Viewpoint public opinion research firm to do a survey of 1,000
    seniors regarding the Part D enrollment process. Asked whether
    enrolling was easy or difficult, 72 percent said ``very or relatively''
    easy, and 89 percent of those who self-enrolled said they experienced
    no problems with the process. We're proud of that success rate.
        Mr. Chairman, thank you again for this opportunity and I will be
    happy to answer your questions.

        Chairman STARK. Thank you.
        Ms. Gottlich.

      STATEMENT OF VICKI GOTTLICH, ESQ., SENIOR POLICY ATTORNEY,
                   CENTER FOR MEDICARE ADVOCACY, INC.

        Ms. GOTTLICH. Chairman Stark, Congressman Camp, Members of
    the Committee, thank you for the opportunity to testify today
    about beneficiary protections and Medicare Part D.
        I am Vicky Gottlich of the Center for Medicare Advocacy.
    The center is a national nonprofit organization headquartered
    in Connecticut. We represent beneficiaries in the State of
    Connecticut. We also advocate and assist and educate
    beneficiaries and their advocates across the country. My
    written testimony discusses the complexity of Part D benefits
    and includes recommendations for simplifying the appeal system
    as a way to improve beneficiary protections. My oral comments
    will provide examples of the issues I describe in my written
    testimony. Some of these examples came to the center's
    attention just this week.
        CMS educational efforts and the ``Medicare and You''
    handbook and planned materials don't do an adequate job of
    explaining the technicalities of Part D or of alerting
    beneficiaries to benefit changes. For example, a beneficiary
    from Florida e-mailed us this week to complain that she had
    reached the coverage gap but that her Humana complete plan no
    longer covered brand name drugs in the gap. She is paying a
    higher premium for gap coverage that does not benefit her and
    she cannot change to a lower-cost plan. This very articulate
    beneficiary did not understand that private insurance companies
    that offer Part D can change the plan benefit structure each
    year for their own reasons and regardless of reimbursement
    rates. She received an annual notice of change last year, but
    the annual notice of change was very difficult to read and, for
    many beneficiaries, is too complicated. Unfortunately, we are
    in the process of reviewing the draft model, and we will notice
    a change for next year, and quite frankly, it is worse. State
    health insurance assistance programs, like Choices in
    Connecticut and HICAP in California, do a good job in education
    and counseling, but they don't have adequate funding to assist
    all beneficiaries.
        As an aside, I would like to point out that the CMS
    promotes gap coverage. We already know that the one plan
    providing limited brand name gap coverage in 2007 will not do
    so in 2008, leaving beneficiaries who must use brand name drugs
    without assistance in the gap. Congressman Camp, I would like
    to clarify our comments about the notice of the lack of appeal
    rights. We agree with you that the ``Medicare and You''
    handbook does include information about appeal rights. As a
    partner with CMS, I get to comment on the draft of that
    handbook every year, and every year, I have commented that the
    descriptions are inadequate. CMS rarely takes any of my
    comments and makes improvements.
        But it is not enough for us to say, that information is in
    the handbook. In 1996, the OIG did two reports on HMO enrollees
    and their knowledge of appeal rights. The OIG found that
    enrollees knew about appeal rights in general, but what they
    didn't understand is how those appeal rights would apply to
    specific situations. As Ms. Norwalk said today, the most
    important thing is what happens at the pharmacy counter. It is
    the required notices that Ms. Norwalk described that are not
    being handed out, that are not being displayed so that
    beneficiaries don't even know how to start the process. They
    don't know that the information about appeal rights in the
    ``Medicare and You'' handbook applies to them at that
    situation. But it is not only beneficiaries who don't have this
    information; it is actually the trade press and doctors who
    don't know about this protection. BNA yesterday reported on a
    new study about Part D formularies printed today in the Journal
    of the American Medical Association. The study said that when a
    beneficiary learns at the pharmacy that a drug is not covered,
    the pharmacist or patient must seek a new prescription from the
    doctor or the beneficiary must pay higher cost-sharing for the
    prescribed medication. There was no mention in the BNA article
    that the beneficiary or the physician could seek an exception
    to cover nonformulary drugs or to lower the cost sharing. It
    will not be sufficient to get data from CMS or from plans about
    appeals because this data will not capture the number of people
    who walked away from the pharmacy without getting the drug or
    paying for the drug out-of-pocket and not understanding that
    they could have sought protection through the appeals process.
        We also recommend in our written testimony simplifying the
    appeals process by eliminating distinctions between exceptions,
    coverage determinations and prior authorizations and by
    requiring plans to make prior authorizations and utilization
    management requirements widely available. The Maine Legal
    Services for the Elderly program contacted me on Tuesday about
    drug plans that impose more than a prior authorization or
    utilization management requirement on drugs so that a
    beneficiary or a physician must have to request an exception
    more than once. For example, one plan that listed both prior
    authorization and quantity limits for Lipitor told Maine Legal
    Services that the prior authorization really just meant the
    quantity limit distinction. The physician therefore requested
    an exception based on quantity limits which was denied because
    he had not shown that the patient had tried other drugs and
    failed. The plan did not describe the step therapy requirement
    anywhere and had not told the advocates about the requirement
    when they inquired.
        I would like to clarify a point that Ms. Norwalk made. She
    said that if somebody gets prior authorization, they get prior
    authorization for the entire plan year. That is actually not
    true. If you get an exception, it lasts for the entire plan
    year. But if you get prior authorization, plans sometimes will
    require the physician to request prior authorization on a
    monthly basis. That is very burdensome, especially since
    doctors are not compensated for this work. Even if a
    beneficiary gets an exception from one plan, however, she has
    to go through the process again, sometimes with a different
    outcome if she changes plans.
        So, again, this week, we heard from Michigan SHpp
    describing a beneficiary whose doctor faxed twice to her new
    plan an exception request based on the beneficiary's need for
    both a higher dose of a formulary drug and a drug in a format
    that was not on the formulary. This was a duplication for this
    beneficiary because the beneficiary had been in a previous plan
    in which she had gotten the exception. Although beneficiary
    protections exist in Part D, they are inadequate and not being
    applied properly to help beneficiaries in the program
    themselves.
        One further area where we see problems is in the off-label
    drug use. Individuals who require drugs that are off-label can
    request an exception. They have to establish that the drug is
    approved by one of three compendia listed in Medicare
    regulations. Unfortunately, those compendia are not accessible
    to the general public. Advocates and doctors must pay in order
    to get evidence they need in order to present their appeal. An
    advocate from Minnesota complained that she was able to get
    free access at the good will of the med school library to some
    of the information in the compendia, except they didn't give
    her all of the information she needed; so she didn't have all
    of the information, and she lost her appeal.
        We are recommending one of two things: either that plans be
    required to provide access to the compendia if they are denying
    a drug based on off-label use, or that the standard be changed
    to a provision that is similar to the requirement that Medicare
    contractors provide access to drugs under the part B standard
    of review. In sum, there are too many drug plans; there are too
    many varied benefit packages. People don't have enough
    information to make adequate choices. As indicated, people are
    not filing appeals. They are either not getting their drugs, or
    they are paying for them by themselves. If they try to use the
    appeals process, it is too difficult.
        We would like to recommend that the best protection would
    be to include a drug benefit as part of Medicare and to give
    the Secretary the authority to negotiate drug prices on behalf
    of beneficiaries. Additionally, we would like to see the number
    of plans available limited and the benefit structure
    standardized so that beneficiaries have a better chance of
    understanding what is being offered and getting access to the
    drugs they need. Thank you.
        [The prepared statement of Ms. Gottlich:]
        Statement of Vicki Gottlich, Senior Policy Attorney, Center for
                               Medicare Advocacy
        Chairman Stark, Ranking Member Camp, distinguished Members of the
    Subcommittee, thank you for the opportunity to testify today on behalf
    of Medicare beneficiaries concerning beneficiary protections under
    Medicare Part D. I am Vicki Gottlich, a Senior Policy Attorney with the
    Center for Medicare Advocacy, a national, non-profit, non-partisan
    organization that works to ensure fair access to Medicare and quality
    health care.
        Overall, the Center has assisted thousands of Medicare
    beneficiaries and their helpers across the country to understand and
    utilize Part D. We hear repeatedly from them about problems that arise
    from the complexity of the program. There are too many plans with
    varying benefit structures and formularies, making meaningful
    comparisons impossible. Beneficiaries have insufficient information to
    make sound choices and to understand formularies and coverage gaps.
    Some beneficiaries are given incorrect information by plan marketing
    agents and find themselves in drug or other health plans in which they
    did not intend to enroll. Beneficiaries are not enrolled in the correct
    plan or are charged incorrect cost-sharing because of bottlenecks in
    transferring information about enrollment, premium payments, and cost-
    sharing among Part D plans, the Centers for Medicare & Medicaid
    Services (CMS), and the Social Security Administration (SSA). The Part
    D exceptions and appeals process is so convoluted that it is not
    adequately accessible to Medicare beneficiaries.
        We thank Chairman Stark for your leadership in holding hearings on
    Part D and in introducing legislation to add important consumer
    protections to the program. We also thank Congressman Doggett for your
    legislation to improve the low-income subsidy, and Congressman Becerra
    for your legislation to improve the Medicare Savings Programs. Both the
    Doggett and Becerra bills will provide needed assistance to people with
    limited income and resources. We thank Congressmen Murphy and Courtney,
    from the Center's home state of Connecticut, for their Part D
    legislation as well.
        The Center for Medicare Advocacy believes that the best consumer
    protection for Medicare beneficiaries would be to add a drug benefit to
    the traditional Medicare program and to stop the privatization of
    Medicare. For over 20 years, the Center has watched what happens to
    Medicare beneficiaries when private health insurance companies decide
    to change their benefit packages, shift more costs onto beneficiaries,
    or leave Medicare entirely, all for business reasons that may have
    nothing to do with Medicare funding and that definitely have nothing to
    do with the well-being of older people and people with disabilities.
    For example, the June 15, 2007 Drug Benefits News reported that more
    plans will go to a four-tiered benefit design in 2008 to avoid adverse
    selection by beneficiaries with greater drug care needs. Plans keep
    premiums lower by requiring ``the relatively-resource intensive
    beneficiary to pay more.'' We will leave that conversation for a
    different hearing, however, and focus instead today on the Part D
    exceptions and appeals processes.
        In promoting Part D, CMS assured beneficiaries that they would have
    access to all of their medically necessary prescription drugs. What CMS
    failed to explain to beneficiaries is that they might have to file for
    a ``coverage determination'' and pursue an appeal if the drug they need
    is not on their plan's formulary or is subject to certain restrictions,
    such as a limitation on the number of dispensable pills (``quantity
    limits''), or they might need to request the plan's permission before
    the drug is prescribed and paid for (``prior authorization''). The
    process for requesting a coverage determination and then an appeal is
    very detailed. Most beneficiaries do not even understand this process
    or the fact that they have the right to seek coverage for a drug not on
    their plan's formulary.
        Under Medicare regulations, the Part D appeals process cannot begin
    unless and until a beneficiary who is denied coverage for a drug at the
    pharmacy affirmatively requests a formal ``coverage determination''
    from his or her Part D drug plan. A coverage determination can only be
    issued by the drug plan itself; the denial at the pharmacy counter has
    no legal effect. The formal coverage determination from the plan should
    explain why the plan will not pay for the drug and how to start the
    appeals process.
        Most beneficiaries who are denied coverage for their prescribed
    medications need to request a special type of coverage determination
    known as an ``Exception.'' An Exception may include a request to cover
    a drug that is not on the formulary, a request to reduce the cost-
    sharing for a drug, a request to provide a larger dose of a drug than
    the formulary limit, or a request to receive the prescribed drug
    without first trying a less expensive drug (``step therapy''). An
    Exception may also include a request to provide a drug without first
    getting prior authorization from the drug plan.
        Unfortunately, beneficiaries are not adequately informed of the
    need to request a coverage determination. As a consequence, they never
    contact their drug plan for a coverage determination and they never
    enter the appeals process. Advocates continue to report that pharmacies
    are not complying with the regulatory requirement to either post or
    hand to beneficiaries the CMS-approved notice, Medicare Prescription
    Drugs and Your Rights, which explains in general the right to contact
    one's plan to request an Exception or other coverage determination.
    Even if the notice is posted, posting provides very little protection.
    The notice is often placed where it is difficult to read. We have heard
    from beneficiaries who use a mail-order pharmacy and who received no
    medication, no information as to why they did not receive their drug,
    and no notice explaining their rights.
        Neither CMS nor the plans take responsibility when advocates
    complain that beneficiaries are not being informed of their rights to
    ask for an Exception and then to appeal. CMS says the plans are
    required to ensure distribution of the generic notice; plans claim they
    have done their job in educating pharmacies.
        Advocates also complain that beneficiaries are not informed of
    their appeal rights at later stages in the appeals process. Some plans
    are not using the standard Coverage Determination notice developed by
    CMS, and therefore not providing beneficiaries and their doctors with
    information needed to appeal. Other plans are not telling beneficiaries
    of further appeal opportunities if their first level of appeal is also
    denied.
        Even if the pharmacy tells a beneficiary that prior authorization
    from the plan is required before a drug will be covered, or that
    another drug must be tried first before the prescribed drug will be
    approved, or that the drug is not on the plan's formulary, the
    beneficiary still does not have all the information needed to take
    action to get the medication. Drug plans do not make available on their
    websites or through their customer service centers information about
    the utilization management tools that apply to particular formulary
    drugs and/or the criteria they use to evaluate a prior authorization
    request. Thus, beneficiaries, their doctors, and their advocates do not
    have the information they need to support a request for prior
    authorization or a request for an Exception. We appreciate that CMS
    issued guidance on June 14, 2007, on making prior authorization
    requirements available. The guidance still puts the burden on the
    beneficiary or doctor to ask for the information, however, and, since
    the CMS document is only guidance and not regulatory, it is unclear the
    extent to which plans will comply.
        Some plans use the prior authorization and Exceptions processes as
    a way to delay providing and paying for prescribed medications. They
    may require doctors to provide more and more information, or they may
    claim they never got a Coverage Determination or Redetermination
    request. In both situations, they can avoid issuing a decision and
    avoid or delay further appeals.
        The Medicare statute makes the opinion of the attending physician
    concerning his or her patient's need for a non-preferred drug the
    controlling factor in determining coverage under an Exceptions request.
    The Part D regulations, however, specifically downgrade the effect of
    the physician's opinion to such an extent that it is not clear whether
    any deference is given. Thus, while beneficiaries must obtain a
    supporting document from their physician even to enter the exceptions
    process, Part D plans are not required to respect the physician's
    opinion. Plans ignore or discount medical records submitted by doctors.
    Some are not satisfied that a formulary drug is ineffective for a
    beneficiary, for example, unless their own claims history for the
    beneficiary, and not the doctor's medical records for that individual,
    show ineffectiveness.
        Problems are exacerbated when the appeal involves an ``off-label''
    drug. The use of drugs off-label is legal in the United States and is
    governed by strict rules for marketing. In many situations, physicians
    and their patients have determined over time that certain drugs
    approved by the FDA for one purpose also help with a different medical
    problem. Yet Part D plans do not defer to the opinion of the treating
    physician, even when the off-label use is supported by scientific
    literature, proven safe and effective over a substantial amount of
    time, and covered by the beneficiary's state Medicaid program.
        The Medicare statute allows for coverage of certain off-label drug
    uses if they are included in one of three specified compendia.
    Unfortunately, beneficiaries, their families, and their advocates who
    are not medical professionals do not have access to these compendia,
    making appeals of these cases very difficult. Some advocates have
    turned to state resources, including state-funded hotlines, for
    assistance in finding the compendia, but these resources are limited,
    inefficient, and incomplete. Without direct access to the compendia,
    beneficiaries and advocates cannot determine whether they have found
    all the entries in which a drug is mentioned, or whether the entries
    they have been faxed are the most up-to-date and complete. In essence,
    Congress and CMS have established a standard of proof which the average
    beneficiary cannot meet because of lack of access to the required
    information source.
        CMS has established a number of mechanisms through which
    beneficiaries may seek redress of problems, including problems with
    drug plan appeal processes. Most of them do not work well.
    Beneficiaries who are not happy with their drug plan are urged to file
    a complaint by calling the Medicare hotline, 1-800-MEDICARE, yet the
    problems identified by the Government Accountability Office in its
    reports detailing problems with the Medicare hotline have not
    abated.\1\ Some advocates have developed relationships with their
    regional CMS offices and can call their regional office contacts when
    egregious problems occur. At times, however, regional office staff have
    been so swamped with complaints that they have told advocates not to
    call them, but to go through the 1-800-MEDICARE hotline.
    ---------------------------------------------------------------------------
        \1\ See, e.g., GAO, Communications to Beneficiaries on the
    Prescription Drug Benefit Could be Improved (GAO 06-654, May 2006),
    http://www.gao.gov/new.items/d06654.pdf; GAO, Accuracy of Responses
    from the 1-800-MEDICARE Help Line Should Be Improved (GAO 05-130,
    December 2004), http://www.gao.gov/new. items/d05130.pdf.
    ---------------------------------------------------------------------------
        For many beneficiaries and advocates, filing a complaint with 1-
    800-MEDICARE, or even with the regional office, is like filing a
    complaint in a black hole. We do not know what, if any, corrective
    action has been taken by CMS about such complaints as marketing abuses,
    failure to comply with exceptions and appeals timelines and notice
    forms, changes in plan formularies without the required notice, and
    inconsistencies between plan information and the CMS web-based plan
    finder tool.
        When the Center and other national advocacy organizations raise
    systemic issues with the CMS central office, we are always asked for
    specifics: the specific pharmacy that does not post or hand out the
    information to call a drug plan; the specific beneficiary whose appeal
    was not acted on in a timely manner or who received incorrect notice;
    the specific beneficiary who was enrolled in a more costly drug plan
    than the drug plan she wanted. We raise these issues with CMS central
    office, however, not simply because we want redress for the individual
    beneficiaries involved. Often we have already talked with the regional
    office on behalf of the beneficiary or moved to the next step in the
    appeals process. We alert CMS because we want them to address the
    problem on a system-wide basis or take corrective action against the
    drug plan in question. They are generally unwilling to do so.
        Another common response from CMS is that we should work the problem
    out with the drug plan. We and other advocates do, in fact, have
    contacts with many of the major drug plans, but those contacts are no
    substitute for enforcement by CMS.
        The Center for Medicare Advocacy, in collaboration with the
    Medicare Rights Center and the National Council on Aging, developed
    recommendations to establish one process through which beneficiaries
    and their prescribing physicians may more easily ask plans for
    decisions, to be known as initial determinations, about drug coverage.
    Our recommendations would simplify and streamline the processes:

          The distinction between exceptions and other coverage
    determinations should be eliminated. Appeals for coverage of non-
    formulary drugs, requests concerning utilization management tools, and
    requests for prior authorization should all be treated the same. The
    various names and processes under the current system create confusion
    for beneficiaries, doctors, advocates, and Part D plans.
          The initial determination notice should be issued
    automatically at the pharmacy whenever a plan rule prevented the
    pharmacy from filling the prescription. The notice should clearly
    explain, using standard language developed by CMS, the plan's basis and
    rationale for the denial of coverage and should contain a clear
    statement that the beneficiary or the doctor may appeal by requesting a
    redetermination of the decision by the plan. Mail-order pharmacies
    should be required to contact a beneficiary by telephone when orders
    cannot be filled as prescribed due to formulary restrictions and then
    to send a written notice.
          Plans should defer to the statement of the physician
    unless they can demonstrate objective, verifiable medical evidence that
    contravenes the treating physician's judgment.
          Physicians should be reimbursed for time spent asking for
    exceptions and other coverage determinations and appeals.
          The Medicare statute should be modified to incorporate
    policy that requires plans to continue supplying a drug to
    beneficiaries stabilized on that drug on the same basis throughout the
    year even after a mid-year plan formulary adjustment that removes the
    drug from the formulary, places the drug on a higher tier, or subjects
    the drug to new utilization management requirements.
          Plans should be required to provide beneficiaries a 72-
    hour supply of a drug they are currently taking after being told that
    the drug is not covered by their formulary, pending the outcome of a
    redetermination. This Medicaid-based provision would afford
    beneficiaries minimal protection against abrupt withdrawal from drugs
    which sustain health and, in some cases, life. If the FDA removes a
    drug from the market for reasons of safety or efficacy, Part D
    enrollees should have immediate access to a temporary supply of an
    alternative therapy.
          Drug plans should be required to specify in their notices
    that an adverse initial coverage determination is based upon an off-
    label usage of a medication. As stated earlier, advocates and members
    of the general public must pay large sums of money to access the drug
    compendia, referenced in the statute, for coverage of off-label use of
    Part D drugs. Reference to the compendia, therefore, should be replaced
    with a statutory standard that is consistent with the Part B standard
    that an off-label drug is prescribed for a medically necessary
    indication. Alternatively, Part D plans should be required to provide,
    as part of their notice, direct access to the drug compendia they
    relied upon to deny coverage. Such a provision is similar to the
    requirement that Medicare contractors provide access to the local
    coverage policies upon which they rely for Part A and Part B claims.
          The Medicare statute should be modified to incorporate
    current CMS policy requiring plans to cover substantially all drugs in
    six protected classes: anti-retroviral drugs, anti-depressant drugs,
    anti-convulsant drugs, anti-psychotic drugs, immunosuppressant drugs,
    and anti-cancer drugs.
          The current statutory section, 42 U.S.C. 1395w-104(h),
    which states that only a Part D-eligible individual can bring an
    appeal, should be amended to permit a physician to request an appeal.
          Beneficiaries should have access to the information
    submitted by the plan in opposition to their appeal in order to ensure
    a more complete and objective review by the Independent Review Entity
    that considers all perspectives on the matter in dispute.
          A formal, standardized appeals process for enrollment and
    disenrollment disputes, as well as a related special enrollment period,
    should be created and enforced. Data collection requirements should
    include data points on the
              Effectiveness of plan transitions, appeals, and
    exceptions processes in providing uninterrupted access to prescribed
    medicines;
              Effect of plan formulary restrictions and appeals
    processes on access to key drug classes, including the six protected
    classes and specialty tier drugs;
              Impact of plan formulary restrictions and appeals
    processes on access to prescribed medications by vulnerable
    beneficiaries, such as LIS recipients and dual eligibles; and
              Plan access policies and practices to enable
    dispensing of specific medicines most subject to appeal and most likely
    to be covered upon independent review.

        The Part D prescription drug program is not working for many
    beneficiaries. Improving the appeals process will provide additional
    protection for beneficiaries who cannot get access to prescribed
    medications. Other consumer improvements could address marketing
    problems, enrollment and disenrollment problems, the lack of adequate
    information, and standardization of plan structures. While the real
    answer to problems encountered by beneficiaries is to provide a
    Medicare prescription drug benefit in the traditional Medicare program,
    the protections mentioned above are needed if the Part D program is to
    continue in its current form.
        The Center for Medicare Advocacy looks forward to working with this
    Subcommittee to ensure that all Medicare beneficiaries get the
    prescriptions they require.

        Chairman STARK. Thank you.
        Dr. O'Brien, in your testimony, you suggested about 100,000
    Medicare eligible beneficiaries with HIV/AIDS, and if that is
    20 percent, with my shoes and socks on, I assume you are saying
    there is a half a million people in this country currently
    receiving some kind of care for HIV/AIDS.
        Dr. O'BRIEN. Yes.
        Chairman STARK. I would suppose, Dr. Fleming, that they are
    very expensive. Insurance companies without the kind
    consideration that Humana has would just as soon avoid them if
    they could, because they are very expensive patients.
        Mr. FLEMING. HIV patients certainly are very expensive
    patients.
        Chairman STARK. So, insurance companies would, if they
    could, avoid--and I don't say that in a pejorative sense--but
    are not out running ads and media exchanges saying, if you come
    see us, we would like to insure you.
        Mr. FLEMING. It comes with the territory.
        Chairman STARK. No, I understand that. Because you were,
    months ago, you may not know it, in our letter from Consumers
    Union, as being in zip code 00501, it is my understanding that
    you were the plan that increased a plan 603 bucks some time
    between February of this year and June of this year. That is 50
    bucks a month for folks. For whatever reason, it could be very
    a good business reason. If we decided to do something somehow
    to protect the beneficiaries from changes that could affect
    them in a way they couldn't predict when they were making the
    choice at the beginning, wouldn't it be simpler for the
    insurance companies to let us just say that if someone has some
    problem, either they lose coverage or the price increases, the
    cost increases, that they be allowed to change rather than try
    and draw a whole lot of rules about what you could do as a plan
    in terms of holding your costs constant? I don't know how many
    people there are that this would affect, but it sounds to me it
    would be a lot simpler for, unless you suspect that that would
    just be adverse selection on all your colleagues in the
    business.
        Mr. FLEMING. I assume you are talking about lock-in and
    removing the lock-in.
        Chairman STARK. Yes, or restricting a plan from making
    changes during the year. Those would be the two alternatives
    that I see.
        Mr. FLEMING. May I address both of them? In general, we
    don't support the lock-in. We believe the lock-in issue is a
    complex issue because of the variation between PDPs and MA-PDs.
    We believe that the previous rules for changing plans worked
    well, which result in peace of mind, I think, for the
    beneficiary and, frankly, for the advocacy groups.
        Chairman STARK. This is a huge bureaucratic problem for you
    guys if that happens?
        Mr. FLEMING. As far as the member changing plans? The only
    thing that I would recommend that you think about is you think
    about what needs to follow the member from plan A to plan B as
    far as TrOOP and all the financial stuff. So, there needs to be
    a mechanism, I believe, that would allow for that transfer of
    information from plan A to plan B.
        Chairman STARK. Well, I am inclined to agree with you that
    it just would seem, from our standpoint, simpler to say, do
    away with the lock-in or adjust it, than try to figure out how
    to understand your complications and regulate them. I think I
    would be more comfortable with that.
        If any of the other witnesses have any feelings about that,
    I would be glad to hear from them, but it seems a simpler way
    for us to approach it.
        You suggest, Ms. Gottlich, that, currently, only an
    individual can bring an appeal, and you would like to permit a
    physician to request an appeal. I think that makes a whole lot
    of sense to me in that if, in fact, I was going to go to Dr.
    Fleming and explain why I need my Zocor and not that other
    thing that I can't pronounce that is the equivalent, I don't
    know why, but if my doctor wrote you the note, he or she could
    probably spell the words that explain the reasons and frame the
    appeal. First of all, the doctor would have to tell me what to
    say, and then I would have to rewrite it and tell you why. Then
    you would have to answer me, and I would have to go to a doctor
    and say, this is what Dr. Fleming said. The doctor did it more
    quickly and in a manner that would be easier for you to
    determine whether it was a reasonable request and probably save
    everybody a lot of time. I can't believe that doctors would do
    this capriciously because their time is pretty valuable. Would
    you have any feeling about her suggestion that we let docs file
    on behalf of their patient?
        Mr. FLEMING. Conceptually, no. I think the issue that we
    need to think about is, by the time it gets to an appeal, that
    means the beneficiary and the beneficiary's physician has
    called in and has made the request and there is a reason why
    the request cannot be approved. So, it is likely that the
    appeal would not have any further information that would say,
    here is the reason why this drug should be approved that I have
    not already disclosed to you.
        Now the cases where there is new information that has come
    forward, let us say a drug gets a new labeling between when it
    was requested and when the appeal comes through, that is new
    information that could in theory come out on appeal in that
    case. In that scenario, I could see that making some sense.
        Chairman STARK. But as I said, I thought it made some
    sense.
        Ms. GOTTLICH. Let me just describe the scenario as it
    currently works now. The doctor will request the exception. It
    will be denied. The next step is redetermination. The doctor
    will have to file that as well. There will be a delay because
    the plan will ask the doctor to go get an appointment of
    representation form. In the meantime, the beneficiary is not
    getting the medicine. Even if it is denied again, the doctor
    still cannot appeal to the independent review entity without
    getting the appointment of representative form adding an
    additional delay. So it really lengthens the whole process when
    you really need something quick and the regulations have very
    short timeframes.
        Chairman STARK. Dr. Fleming, how are you going on your
    Chinese adoption?
        Mr. FLEMING. Sir, if you could help me out with that, I
    would appreciate it. A year ago, I was saying six to 9 months,
    and I am still saying six to 9 months.
        Chairman STARK. What I have got to tell you, anticipating
    your success, let me ask you to Google up Concordia Language
    Villages as an experience for perhaps your older children, and
    perhaps you, Mr. Fleming, at some point, if you are interested
    in Chinese culture and Chinese language, and I hope you will
    be. Our children have gone there, and it is an amazing series
    of camps in Minnesota, and I just wanted to add that.
        Mr. FLEMING. Thank you for that advice.
        Chairman STARK. Do you have any advice, Mr. Camp?
        Mr. CAMP. I want to thank everyone for their testimony
    today. I do think it is important to remember that, despite the
    information we are getting, 80 percent of the seniors are
    satisfied with their drug coverage and would recommend Part D
    to a friend.
        I do, Ms. Gottlich, want to say that if you have any--I
    have looked at this 2007 ``Medicare and You'' report, and I
    think that the appeal information is in very plain language.
    Circle the form is sort of the level it is at now. If you have
    specifics--now, the 2008 report is simply a draft report, and I
    realize that is a work in progress. We have an opportunity to
    impact that draft report. If you could get to me in writing the
    specifics of the exact language that you think is a problem in
    the 2007 report, I would be happy to look at that. If I think
    it is appropriate, I will pass it along. Maybe we can help make
    a better booklet because I think this right to appeal section
    is fairly straightforward.
        But I also would like to say, Dr. O'Brien, you describe I
    think that Medicaid and ADAP are beneficial programs. But I
    would just want to point out to you that at least three States
    have waiting lists for patients to enroll in ADAP. Two States
    are restricting access to certain AIDS drugs. Three States have
    further restricted eligibility to ADAP. Four more States are
    expected to adopt similar cost-containment measures. Also many
    State Medicaid programs limit the number of prescriptions
    people can receive each month. I will just say, Medicare does
    not cap enrollment. So, one of the big global benefits, you may
    not see in your clinic, but at least from a nationwide
    standpoint, Medicare doesn't cap enrollment. In the drug
    benefit, they don't reduce program eligibility. They don't
    implement limits on the number of drugs a senior can take each
    month. So I would contrast that program with ADAP and just say
    that I think the new Medicare drug benefit in terms of
    eligibility and to not cap enrollment is superior to the
    programs you mention.
        Dr. O'BRIEN. Would you----
        Mr. CAMP. I don't really need a comment. My time is very
    limited, but briefly if you have something new.
        Mr. FLEMING. You are absolutely right, sir. In certain
    States, there are waiting lists. That is why we want to add
    ADAP to the TrOOP, so we are not further depleting ADAP. We
    also don't want to punish people in States where ADAP and
    Medicaid have been generous, more generous than the current
    Medicare plan.
        Mr. CAMP. So, we have a nationwide plan. Really, in terms
    of if you are Medicaid eligible, you can change each month. I
    wanted to ask a question, Dr. Fleming, about that. If plans or
    individuals were able to change the plans, how are you
    envisioning the details of that? Would they be able to change
    biannually, quarterly, and how do you see that impacting the
    cost of the program?
        Mr. FLEMING. I don't know that I put enough thought into
    the mechanisms for the change, but certainly when you go back
    pre-MMA, the way it worked there, a beneficiary could change
    from a month-to-month basis. In the world of Part D and the
    complexities of TrOOP and all the TrOOP calculations and the
    funding mechanisms around it, I think it is going to be
    something that needs to be thought through to see how those
    dollars flow through the system, because, to your point, I
    don't think we want an unintended consequence of raising costs
    necessarily because of the change.
        On the other hand, we see the value and the peace of mind
    from the beneficiary and from the advocacy groups. We
    understand that. If a beneficiary is not happy with a plan, we
    fully support the notion that they should be able to change.
        Mr. CAMP. We see more than half of the beneficiaries did
    not change from 2006 to 2007, so many people made, in their
    opinion, the right choice.
        Mr. FLEMING. Well, the majority of people did not change.
    As well, I think someone mentioned earlier, that the auto
    enrollees certainly had the ability to change month to month.
    We see very little change there. So, I believe by offering that
    as an opportunity, you are going to see very little change at
    the end of the day from plan to plan.
        Mr. CAMP. The question is, what cost effect that might have
    to a program, because obviously we don't want the program to
    fall under its own rate, because there are a lot of people
    getting a significant benefit. I know, for example, patients
    that enrolled in the Part D plan that Dr. O'Brien mentioned are
    saving more than $7,000 on AIDS drug medicine. That is a fairly
    significant savings.
        Mr. FLEMING. That is a lot of money. If it is permissible
    to you, I would like to take that back as a to-do and provide
    our thoughts back for the formal record.
        Mr. CAMP. I would be interested because I do think there is
    some other point Mr. Stark made that if the plans can change,
    and I realize many people are on a set co-pay so their co-pay
    doesn't change, but if the plans can change, why not the
    individuals? I think we need to explore that and see if there
    is something we can do there. Thank you very much. Thank you
    all for your testimony.
        Chairman STARK. Ms. Tubbs Jones.
        Mrs. JONES. Thank you very much. I would like for the
    record to say that we cannot presume because a senior does not
    change their prescription drug benefit plan that they are
    satisfied. Some of them are just so downtrodden with the
    responsibilities that they have, they say, the hell with it, I
    am just going to just keep what I have, at least I know what I
    have got. It is just like saying 80 percent of them are
    satisfied with the prescription drug benefit; 80 percent of
    those polled were satisfied. We don't know what the group that
    was polled said. That is just like, if you want to believe 4
    percent unemployment in the United States of America. I don't
    know what United States people are living in, but there is
    greater than a 4 percent unemployment in the United States of
    America. So, we have to be careful throwing these numbers
    around.
        My question to you, Ms. Gottlich, is, how long does the
    appeal process take.
        Ms. GOTTLICH. Well, if it goes by the regulations----
        Mrs. JONES. You know how often that is. That is like a
    speedy trial, right.
        Ms. GOTTLICH. Exactly. It can be very quick. It can be 10
    days to get through the independent review entity. But what we
    are finding often is that there are delays at the plan level.
    So, doctors will not get notices. You have to go through and
    get the appointment.
        Mrs. JONES. So, the appeal process may take 10 days, but to
    get to the appeal process, we don't know how long that will
    take.
        Ms. GOTTLICH. When it works right, it can be very fast, and
    the exception from Michigan that I described that we heard
    about this week got resolved this week. But there are
    situations where plans keep asking for more and more and more
    information. So, we had cases that dragged on for months.
        Mrs. JONES. So, Dr. O'Brien, what do you do for a patient
    who is denied coverage? What impact does that have on your
    ability to treat that patient? Do you have drugs to give them,
    or what happens?
        Dr. O'BRIEN. There have been cases we have had to
    hospitalize patients. For example, I use the example in my
    written testimony of fluconazole for cryptococcal meningitis.
    For some people, fluconazole has been very, very difficult. We
    have plans that make us authorize for that on a monthly basis.
    Cryptococcal meningitis in an AIDS patient is a lifetime
    disease. So, we have ended up having to put people in the
    hospital or put them on IB amphotericin, a relatively toxic
    antiretroviral fungal medication. Mrs. Jones. I am a trial
    lawyer, so accuse me of being highly litigious.
        Who is liable for that situation of that patient not
    receiving the type of prescription that they should be
    receiving once it is prescribed by the doctor?
        Dr. O'BRIEN. I am not a trial lawyer, so I could not offer
    an opinion on that.
        Mrs. JONES. No one has been sued that you know of yet with
    regard to that? I just wanted to throw it out there.
        I think, and nobody has asked me, but I think that the
    patient should be able to change prescription drug programs as
    often as the programs are able to change formulary. If they
    could change formulary, the people ought to be able to switch
    and go to the type of prescription that they have.
        I thought I was going to use up all my time, Mr. Chairman.
    I didn't. I am so proud of myself. I yield back the balance of
    my time.
        Chairman STARK. Thank you, ma'am.
        Mr. JOHNSON.
        Mr. JOHNSON. Thank you, Mr. Chairman. I am not a trial
    lawyer.
        Chairman STARK. Oh, you would be a good one, though.
        Mr. JOHNSON. You bet.
        According to a survey conducted by Medicare Education
    Network in January of this year, overwhelming majorities of
    enrollees gave Part D high ratings. We have been quoting a lot
    of percentages, but they said 91 percent said the plan is
    convenient to use, 89 percent said they understand how the plan
    works, 86 percent said the plan had good customer service, 81
    percent said copays are affordable, 79 percent said the monthly
    premium is affordable, and 77 percent said the plan covers all
    medicines. Those results contradict some of the testimony.
        If the beneficiaries are satisfied with their Part D
    benefit in competition successfully keeping prices affordable
    for our seniors, I wonder, Mr. Precht and Ms. Gottlich, what
    you think, why you think choice and competition are bad for
    America or America's seniors?
        Mr. PRECHT. I don't.
        Mr. JOHNSON. Well, good.
        Mr. PRECHT. We think that the choice should be expanded to
    include an option directly under Medicare so that people can
    get drug coverage directly through the Medicare Program. That
    is how it works with Parts A and B. They can get their Medicare
    directly from the original Medicare Program or they can choose
    the Medicare Advantage Plan.
        I just want to say one other thing. If 77 percent of the
    folks say that Part D is covering all of their drugs, when we
    are talking about consumer protection, we are talking about the
    other 33 percent, the folks that are running into problems
    getting coverage. What we are asking for is making that appeals
    process work a little better, getting the plans to give the
    benefit of the doubt to the doctor when he says that this is
    the drug that is working for my patient. That is essentially
    what we are saying.
        Ms. GOTTLICH. The other two points are that if you look at
    studies, and actually my favorite is the book Blink, the best
    selling book, there are some times when their choices are too
    broad, so there is no choice at all.
        That is what I think is going on with the Part D plans.
    There are too many plans so people just choose a plan based on
    the name or something their friend says. They don't really
    analyze to see if it is the best plan for them, because there
    are way too many plans to take a look at everything. Yeah, it
    is fine to have a choice plan. We would like to see the number
    reduced, we would like to include a plan in Medicare.
        The other thing to look at in the statistics, as Mrs. Tubbs
    Jones said, is what do the statistics tell us. If you look at
    the Kaiser satisfaction survey, they said 80 percent of the
    people were satisfied. But the people who weren't satisfied
    were the people who were poor, the people who used the most
    drugs. These are the people who we are trying to protect. It
    would be nice to work to 100 percent satisfaction.
        Mr. JOHNSON. You don't know that for sure, you are just
    presuming that.
        Ms. GOTTLICH. No, no, no. That is what Kaiser said in their
    beneficiary survey earlier in the year.
        Mr. JOHNSON. Dr. Fleming, you know, I like your smart
    summary. I think that is a good document and a great service to
    your customers. I wonder why you decided to provide that
    resource to your beneficiaries and if you can tell us what the
    costs are above and beyond the traditional benefit.
        Mr. FLEMING. Sure. The smart summary was our response to
    the requirement in the regulation that said that we needed to
    provide a monthly summary of the medications used by the
    beneficiary. So, we decided to work with seniors and we had
    seniors help us develop this tool.
        Frankly, I am not sure we are smart enough to develop
    something like this. We worked with them in focus groups to
    help develop this tool to give them pictures, charts and graphs
    around where you are within the coverage parameter, the donut
    hole. We gave a lot of good information----
        Mr. JOHNSON. Is that computed into your cost.
        Mr. FLEMING. It is computed into our premium and cost. One
    of the things we are very proud of is this Humana Rx Record On-
    The-Go, which is really a tool that whenever you go to the
    doctor's office or ER, whenever you get that question, what
    drugs you are taking, if they can pull this little tool, it is
    something you fold up in your billfold, pull it out, hand it to
    the doctor in the ER, it gives them a list of the entire
    medications they have used over the last 6 months.
        What we intended to do with this was to really derive peace
    of mind with that beneficiary, give them confidence about their
    ability to make decisions.
        I think you talked earlier about how seniors are smart. We
    do think they are smart because they have helped us a lot in
    thinking about how we take a requirement regulation and really
    make it a usable document, a relationship vehicle frankly with
    them.
        Mr. JOHNSON. Thank you. Thank you, Mr. Chairman.
        Chairman STARK. Dr. O'Brien, how much does it cost, can you
    tell me on average, to treat an AIDS/HIV patient, the whole
    hospital, the physician services, the pharmaceuticals on
    average in a year? Do you have any idea?
        Dr. O'BRIEN. I don't have those numbers at my fingertips,
    it depends a lot on what stage of the illness the person is in.
    Antiretroviral drugs themselves can cost $20,000 a year for a
    course of antiretroviral therapy, again depending on which
    drugs, and how many drugs the person is on. That is probably
    the largest expenditure for a person that is not being
    hospitalized.
        Chairman STARK. Any idea, Dr. Fleming? Do you have any idea
    what Humana's out-of-pocket if you have to provide benefits to
    an AIDS----
        Mr. FLEMING. I don't know the specific for that. I am
    certainly not an expert in HIV, but I can tell you for most HIV
    members, if they have the elefined standard plan, they are
    likely going to go through the donut hole and into the
    catastrophic coverage at some point through the year, because
    these are $400 per month therapies and if you are on two or
    three of them, they are very expensive.
        Chairman STARK. Do you have any----
        Dr. O'BRIEN. My colleague helped inform me that 11 to
    $13,000 per year for drugs for somebody not hospitalized;
    somebody with advanced disease requiring hospitalization, on
    average $100,000 per year.
        Chairman STARK. $100,000?
        Dr. O'BRIEN. Yes.
        Chairman STARK. One of the things I might suggest, I guess
    if we have got a half million people and that we--a simple
    solution here, I am sure the insurance companies would join me
    in this, but would there be any real reason most of them--there
    would be less and less disabled, but many of them would qualify
    as disabled, that we wouldn't treat them as we do end stage
    renal? Why do we have to fuss around with this? With the
    prescription drugs changing, with the level of treatment
    changing, I am not sure we would save--we might save some
    money, but it is a kind of--maybe it isn't that unique, maybe I
    just opened the door to 100 other diseases of this nature that
    would require that I--in spite of Michael Moore, I would lose,
    but I don't know. I don't know whether there is any similarity
    there. It would certainly go ahead.
        Dr. O'BRIEN. We certainly strongly support the idea of
    that. HIV is beyond just the disease is a major killer of young
    African Americans, over 50 percent of new HIV and AIDS cases in
    African Americans. It is also a communicable disease; treating
    somebody is prevention. Treating somebody with HIV is not only
    treating that person and their family, it is preventing other
    people from becoming infected. So, there is a community
    interest in treating people. We strongly support the idea of
    universal coverage for people with HIV/AIDS.
        Chairman STARK. I sense that if we did this that the number
    would suddenly jump, the number under treatment from 500--the
    people who would come in, so perhaps we would have an increase.
    It is just an idea.
        As I say, we spend about 58,000 on average on dialysis
    patients, and my guess is we have about 200 or 250,000 of
    those. So, your numbers are perhaps--you have a higher number
    but perhaps a smaller cost. We haven't had huge increases much
    to the dismay of some of the major dialysis companies, but we
    haven't had a huge increase in payment in that program. Just an
    idea.
        I want to thank all of you for your patience for waiting,
    accommodating our kind of fractured voting schedule here. I
    thank my colleagues for their patience with the Chairman's
    long-winded inquiries.
        Mrs. JONES. Mr. Chairman, I want to ask that if you all
    have any other guidance you would like to give us around this
    area as we move through, we would be deeply appreciative.
        Chairman STARK. I would second that.
        If there are no further inquiries, the hearing is
    adjourned.
        [Whereupon, at 5:39 p.m., the hearing was adjourned.]
        [Submissions for the record to follow:]
              Statement of American Association of Retired People
        Chairman Stark, Ranking Member Camp, distinguished Subcommittee
    members, on behalf of AARP's 39 million members, we thank you for
    holding this hearing on the need to strengthen beneficiary protections
    in the Medicare Part D prescription drug program.
        Among the most important protections in Part D is the extra help
    provided by the low-income subsidy to those least able to afford their
    drug costs. LIS provides greatly reduced costs and no gap in coverage
    (no ``doughnut hole'') for beneficiaries with incomes below 150 percent
    of the federal poverty level ($15,315 for individuals, $20,535 for
    couples).
        We are pleased that the LIS is providing essential help with
    premiums and copays to millions who otherwise might go without
    lifesaving medicines because of cost. We commend the Center for
    Medicare and Medicaid Services (CMS) for providing auto--and
    facilitated enrollment in LIS for people enrolled in Medicaid, a
    Medicare Savings Program (MSP), or receiving Supplemental Security
    Income and deemed eligible for LIS. We also applaud CMS for waiving the
    late enrollment penalty for anyone found eligible for LIS. We similarly
    appreciate steps the Social Security Administration (SSA) has taken to
    minimize the burden of annual LIS eligibility redeterminations.
        We have worked diligently with CMS, SSA, the Access to Benefits
    Coalition, State Health Insurance Assistance Programs, and many other
    partners on the daunting task of finding and enrolling low-income
    beneficiaries who are not deemed eligible. Reaching beneficiaries with
    limited incomes has always been a challenge, but LIS outreach and
    enrollment is especially difficult because the LIS program has a
    serious flaw--an asset test.
        AARP believes that addressing the asset test should be a top
    priority for Congress this year, along with efforts to create a level
    playing field between Medicare Advantage and traditional fee-for-
    service Medicare. A portion of any savings generated by creating such a
    level playing field should be reinvested first in Medicare,
    particularly to address the Part D asset test limits.
    LIS Protection Out of Reach for Many Low-Income Beneficiaries
        Millions of people who need the extra help LIS provides are not
    getting it, largely because of the asset test. To be eligible for LIS,
    beneficiaries can have no more than $11,710 in savings, or $23,410 for
    a couple, no matter how low their income or how high their other living
    expenses.
        These amounts are hardly enough to get people through retirement,
    and AARP has consistently opposed the asset test. However, the LIS is
    currently denied to anyone who has saved even one dollar over these
    limits.
        The asset test directly contradicts efforts to encourage people to
    save by penalizing even those with modest savings. We should encourage
    people to save for retirement, not penalize those who do.
        The Kaiser Family Foundation has estimated that more than 2.3
    million beneficiaries who meet LIS income criteria do not meet the
    asset test. Almost half exceed the asset limit by $25,000 or less. In
    fact, the asset test is the leading reason why people who apply for the
    subsidy are rejected.
    Daunting Application Imposes Barrier
        The asset test is also proving to be a serious barrier to
    enrollment even for those who meet its unreasonable limits. CMS
    projected in its final regulation on Part D that 14.4 million
    beneficiaries would be eligible for the LIS \1\Sec. wever, to date,
    only slightly more than 9 million are enrolled. That means up to 5
    million eligible individuals are not getting the Medicare help they
    need. CMS has estimated that as many as 3 million of these people have
    no drug coverage at all.
    ---------------------------------------------------------------------------
        \1\ CMS-4068-P, Medicare Program: Medicare Prescription Drug
    Benefit, 69 Fed. Reg. 46632: August 3, 2004
    ---------------------------------------------------------------------------
        Because of the asset test, the LIS application form is eight pages
    of daunting and invasive questions that are difficult for many people
    to answer. For example, it:

          requires people to report not just savings but such
    obscure details as the current cash value of any life insurance
    policies--information people simply do not have on hand;
          asks people whether they expect to use savings for
    funeral or burial expenses, but does not explain that individuals can
    have up to $1,500 (3,000 for couples) in savings above the asset limits
    for such expenses;
          asks invasive questions, such as whether applicants get
    help with meals or other household expenses from family members or
    charities which can be difficult to estimate and embarrassing to some;
    and
          threatens applicants with prison terms if information
    they provide is incorrect.

        Applying for the LIS thus can seem overwhelming and require many
    hours, extra help from family members or insurance counselors, and
    often repeated efforts to find all of the required information.
        This asset test and the paperwork barrier it creates is a key
    reason why between 3 and 5 million people who should qualify for the
    LIS are not getting it.
    Inadequate Coordiantion with Medicare Savings Programs
        Similar problems plague the Medicare Savings Programs (MSPs) that
    help pay other Medicare cost sharing requirements. As with LIS,
    millions of Medicare beneficiaries living on very limited incomes are
    not getting the help they need from these vital programs. In addition,
    there is only limited coordination between LIS and MSP, even though
    they serve primarily the same populations.
        MSPs are state-administered programs and include:

          the Qualified Medicare Beneficiary (QMB) program which
    pays Medicare Part B premiums and cost sharing for those living at or
    below the poverty line,
          the Specified Low-Income Medicare Beneficiary (SLMB)
    program which pays Part B Premiums for those between 100 and 120
    percent of poverty, and
          the Qualified Individual (QI) program which gives states
    capped allotments--subject to periodic reauthorization by Congress--to
    pay Part B premiums for those between 120 and 135 percent of poverty.

        Beneficiaries enrolled in MSP programs are automatically eligible
    for and enrolled in the LIS. However, SSA does not screen LIS
    applicants to see if they are also eligible for MSP. This is a serious
    missed opportunity, as MSP eligibility criteria in several states is
    less restrictive than LIS criteria, and some states have effectively
    eliminated the asset test altogether. Thus, many individuals who are
    eligible for the LIS under their state's MSP rules are being improperly
    rejected because SSA only reviews applicants against LIS criteria.
        The same kind of barrier to enrollment seen with the LIS exists in
    the majority of states that still impose an asset test on their MSP
    programs. The result, not surprisingly, is that the vast majority of
    MSP-eligible individuals are not enrolled. Urban Institute researchers
    estimate that two thirds of beneficiaries eligible for QMB, and fully
    87 percent who are eligible for SLMB, are not enrolled.\2\
    ---------------------------------------------------------------------------
        \2\ Dorn, S. and Kenny, G.M., Automatically Enrolling Eligible
    Children and Families into Medicaid and SCHIP: Opportunities,
    Obstacles, and Options for Federal Policymakers (New York, NY: The
    Commonwealth Fund, June 2006).
    ---------------------------------------------------------------------------
        AARP also believes that there should be full coordination between
    the LIS and MSP programs. Applicants for either the LIS or MSP should
    be screened for both programs. Eligibility criteria should be
    simplified, standardized and harmonized to reduce confusion and
    unnecessary barriers created by varying state rules.
        In addition, the QI program should be made permanent by folding it
    into the SLMB program so it is no longer subject to annual allotment
    caps and all eligible individuals can be assured of needed assistance.
    First Steps
        AARP is firmly committed to eliminating the asset test. Until the
    asset test is fully eliminated, AARP believes there are interim steps
    Congress can and should take that can significantly reduce the barrier
    it creates to the LIS and MSP.
        AARP is proud to support the Prescription Coverage Now Act of 2007
    (H.R. 1536), introduced by Representative Lloyd Doggett of Texas. This
    legislation takes solid first steps toward our goals of eliminating the
    asset test, increasing enrollment, and improving coordination between
    the LIS and MSP. We have worked closely with Rep. Doggett's office on
    this legislation, and greatly appreciate his strong leadership.
    Raising the Limits: Most importantly, this legislation would increase
            the asset test limits to 27,500 for individuals and $55,000 for
            couples. This will provide relief to millions of beneficiaries
            who truly need the help the LIS can provide. Even those who did
            not oppose an asset test in Medicare's drug plan agree that
            current limits--$11,710 for individuals, $23,410 for couples--
            are far too low.
    Streamlining the Application: In addition to raising the asset limits,
            Rep. Doggett's legislation would streamline the LIS application
            in two very important ways. First, it would eliminate the
            question about the cash value of life insurance. Asking for the
            cash value of life insurance makes the application process
            unduly difficult--this is information that people--regardless
            of income--simply do not have on hand. Asking for this data
            needlessly lengthens the application form and requires
            individuals to calculate the cash value figure. This
            unnecessary and harmful red-tape barrier to the LIS application
            needs to be removed.
        The legislation would further streamline the LIS application by
    deleting the confusing and embarrassing question about whether someone
    gets occasional help from family or charities with living expenses like
    groceries. Many low income people get assistance from family, churches,
    and food banks on a highly irregular, as-needed basis and in very
    limited amounts. This question, however, requires applicants to enter a
    specific average monthly amount. Given the often irregular nature of
    such assistance, this is a figure that many people are unlikely to know
    with any degree of accuracy. And those who rely on such assistance are
    the same individuals who are most in need of the LIS.
        Efficiently Targeting Outreach: The Prescription Coverage Now Act
    would also help SSA target its LIS outreach efforts to beneficiaries
    who meet the LIS income criteria. The bill would allow Social Security
    officials to use IRS data--data they already have to determine income-
    related Part B premiums--to also determine who meets LIS income
    criteria. SSA could then much more efficiently and effectively target
    LIS outreach efforts to just these individuals. Currently, the IRS
    verifies income data submitted by people who apply for the LIS, but SSA
    does not have authority to use the IRS data it already has to determine
    which Medicare beneficiaries have incomes that meet LIS eligibility
    criteria for outreach purposes. The HHS Inspector General has said that
    legislation authorizing this limited use of income data would help to
    more effectively and efficiently target LIS outreach efforts.\3\
    ---------------------------------------------------------------------------
        \3\ Identifying Beneficiaries Eligible for the Medicare Part D Low-
    Income Subsidy, Daniel R. Levinson, Inspector General, November 17,
    2006, http://oig.hhs.gov/oei/reports/oei-03-06-00120.pdf
    ---------------------------------------------------------------------------
        Coordinating the LIS and MSP: Rep. Doggett's legislation takes an
    additional important step of requiring SSA to screen LIS applicants for
    MSP eligibility. Full coordination between the LIS and MSP would mean
    that many more low-income beneficiaries would get needed help with both
    Part D and traditional Medicare premiums and cost-sharing obligations.
    Additional important provisions in the Prescription Coverage Now Act
    would:

          keep the LIS cost sharing affordable by indexing it to
    the general inflation rate, rather then the increase in overall Part D
    costs as under current law;
          exclude the value of LIS benefits from counting against
    eligibility for other low-income assistance programs; and
          permanently waive the late enrollment penalty for people
    enrolled in the LIS.

        AARP is committed to working diligently to ensure this important
    legislation is enacted into law this year.
    Additional Steps
        While the Prescription Coverage Now Act is a critical first step,
    there are additional legislative steps that can and should be taken to
    help low-income Medicare beneficiaries. For example, people who are not
    eligible for the LIS or MSP may be eligible for a state pharmacy
    assistance program (SPAP). These state-funded programs often help
    people with income and asset levels above the LIS and MSP eligibility
    cut-offs. A system to coordinate enrollment applications between LIS/
    MSP and these programs also could prove to be very useful. Action also
    is needed to make MSP eligibility criteria consistent across the states
    and make the QI program a permanent and reliable source of assistance.
    We know that members of this Committee are working to develop
    legislation to address this concern and we look forward to working with
    you.
        In addition, AARP supports legislative efforts to improve the Part
    D benefit by:

          eliminating co-pays for Medicaid beneficiaries who get
    long term care services in Home and Community Based Service (HCBS)
    programs, as is done now for beneficiaries receiving these services in
    nursing homes;
          counting payments by federally qualified health clinics,
    AIDS drug assistance programs, the Indian Health Service and drug
    company Patient Assistance Programs (PAP) toward the Part D ``doughnut
    hole'' coverage gap; and
          increasing funding for State Health Insurance Programs,
    which provide the one-on-one counseling that is most helpful to
    beneficiaries applying for the LIS.

    Conclusion
        The Medicare prescription drug benefit represents the most
    significant change to Medicare since the program began in 1965. The
    extra financial help provided to people who most need it through the
    LIS is a key component of this achievement, but its success is far from
    complete.
        It is critical that we eliminate the asset test that is penalizing
    people who save for retirement and imposing a barrier to enrollment in
    the LIS. The Prescription Coverage Now Act is an important first step
    to eliminating the asset test and ensuring that more people who need
    the assistance the LIS provides can get it. We are committed to seeing
    its enactment this year, and we look forward to working with members of
    Congress from both sides of the aisle to improve the new Medicare
    prescription drug benefit and to ensure that all older Americans have
    access to affordable prescription drugs.

                  Statement of American College of Physicians
        The 123,000 internal medicine physicians and medical student
    members of the American College of Physicians congratulate Chairman
    Stark and the members of the House Ways and Means Subcommittee on
    Health for convening today's hearing on ``on protecting beneficiaries
    in Medicare Part D plans.'' The College believes that while the
    addition of a prescription drug benefit to Medicare through the
    Medicare Modernization Act of 2003 significantly contributes to
    improved health and quality of life for our seniors and disabled
    Americans, there are ways to improve this program to enhance its
    effectiveness. The College appreciates this opportunity to share with
    the Committee our observations and related recommendations to achieve
    this goal.
        The College has long supported the addition of prescription drug
    coverage under Medicare. Prescription drugs are an essential tool for
    treating and preventing many acute and chronic conditions. In 1965,
    when Medicare was first established, pharmaceutical therapies were not
    as commonly available as they are now, and outpatient prescription
    drugs were not nearly as important a component of health care. Today,
    however, they are a primary form of medical care and often substitute
    for more costly therapies. The growing importance and increased use of
    prescription drugs have had a disproportionate impact on the elderly,
    who use prescription drugs more extensively than the general population
    because of high rates of chronic illness.
        Recent survey data reflects that most Medicare beneficiaries are
    satisfied with their Part D plan and believe it is saving them
    money.\1\ A review of the literature and the observations of our
    members reflect areas that need to be improved to ensure that access to
    these important medications is available to all beneficiaries and that
    the most effective medication is received in a timely manner. The
    College requests that the Committee consider the following:
    ---------------------------------------------------------------------------
        \1\ Kaiser Family Foundation/Harvard School of Public Health.
    Seniors and the Medicare prescription drug benefit. December 2006.
    Accessed at http://www.kff.org/kaiserpolls/upload/7604.pdf on 19 June
    2007

          Congress should pass legislation to facilitate increased
    enrollment for the Part D low income subsidy (LIS). The current Part D
    benefit provides a low income subsidy (LIS) to beneficiaries with
    incomes below 150 % of the federal poverty level. This subsidy
    significantly reduces or eliminates premium payments and provides for
    substantially reduced copayments for medications. Without the LIS, many
    of these low-income individuals are unable to obtain the medication
    they require. Recent data \2\ indicates that over 3 million
    beneficiaries who meet the income requirement for the LIS are not
    receiving the subsidy and are not enrolled in a Part D program. The
    non-partisan Commonwealth Fund recently outlined a series of
    recommendations to address this problem that include removing or
    modifying of the overly restrictive asset requirement, simplifying of
    the enrollment process and providing improved means for beneficiaries
    to navigate the process.\3\ The College recommends that Congress
    consider implementation of these recommendations.
    ---------------------------------------------------------------------------
        \2\ The Commonwealth Fund. Improving the Medicare Part D program
    for the most vulnerable beneficiaries. May 2007. Accessed at http://
    www.commonwealthfund.org/usr_doc/Summer_
    improvingMedicarepartD_1031.pdf?section=4039 on 19 June 2007
        \3\ The Commonwealth Fund. Improving the Medicare Part D program
    for the most vulnerable beneficiaries. May 2007. Accessed at http://
    www.commonwealthfund.org/usr_doc/Summer_
    improvingMedicarepartD--1031.pdf?section=4039 on 19 June 2007
    ---------------------------------------------------------------------------
          Congress should pass legislation to make the Part D
    benefit less complex and provide both beneficiaries and their
    physicians with more essential information to make plan choices and
    treatment decisions.
          Survey data indicates that 73 % of seniors, 91 % of
    pharmacists and 92 % of physicians agree that the current Part D
    benefit is overly complex.\4\ The typical beneficiary has a choice of
    anywhere from 45-60 drug plans to choose from in their local area; each
    with a different premium, deductible, co-payment structure and
    formulary. In addition, important formulary information regarding the
    plans use of prior authorization and utilization management procedures
    (e.g. tiering, step-therapy) is often not readily accessible. These
    problems make it difficult for beneficiaries, often in consultation
    with their personal physicians, to choose the plan that best needs
    their medication needs. The College recommends that;
    ---------------------------------------------------------------------------
        \4\ Kaiser Family Foundation/Harvard School of Public Health.
    Seniors and the Medicare prescription drug benefit. December 2006.
    Accessed at http://www.kff.org/kaiserpolls/upload/7604.pdf on 19 June
    2007
    ---------------------------------------------------------------------------
          Congress should consider legislation to reduce the number
    of plan choices available to beneficiaries. One possible option is to
    use an approach similar to how Medigap plans are currently offered--
    drug plans would be able to offer only a limited number of standard
    benefit designs which are defined by Congress.
          Congress should provide the Centers for Medicare and
    Medicaid Services (CMS) with increased authority (including
    facilitating its ability to enact financial penalties) to ensure that
    all Part D plans make essential formulary information, including prior
    authorization and utilization management information, easily accessible
    at least through placement on their web site and through contact with a
    designated plan representative.
          Congress should provide increased funding to the State
    Health Insurance Assistance Programs (SHIPs) in each state. These
    programs, often provided through the local Office on Aging, offer the
    one-on-one counseling to Medicare beneficiaries that is often needed to
    help navigate the current complex process of choosing the most
    beneficial drug plan. It is reported that these programs are currently
    overwhelmed and require increased funding to adequately provide these
    services.
          Congress should pass legislation to improve the Part D
    benefit's exception and appeals process.

        Our members continue to report multiple occasions when the
    medication they prescribe for a beneficiary cannot be fulfilled at the
    pharmacy due to it not being in the plan's formulary, or due to various
    prior authorization or utilization management requirements. As noted
    above, having information about these formulary limitations for each
    plan easily available to the prescribing physician would significantly
    reduce the frequency of these events. Nonetheless, there are occasion
    when the patient must have the specifically prescribed medication, and
    the patient and his or her physician must request an exception to the
    formulary limitation. The current exceptions and appeals process is
    overly complex and evidences several problems that interfere in the
    beneficiary obtaining their required medication in a timely manner. The
    College believes that the current exceptions and appeals process can be
    improved by the following recommendations:

          Congress should pass legislation to simplify and make
    more uniform the exceptions and appeals process. Currently, while CMS
    has encouraged each plan to accept a standardized exception and appeals
    request form developed by the American Medical Association Part D
    Workgroup, each plan continues to devise its own processes, standards
    of medical necessity, and criteria for reviewing requests for
    exceptions and other coverage determinations. This complexity confuses
    the beneficiary and adds excessive burden to the physician practice
    attempting to assist the beneficiary in obtaining the needed
    medications. Legislation to require increased standardization of the
    process and criteria plans use for exceptions and appeals would
    significantly improve the situation.
          Congress should provide CMS with increased authority to
    ensure that beneficiaries receive essential information in a timely
    manner to challenge a plan's coverage decision. Pharmacies are
    currently required by regulation to either post or hand to
    beneficiaries a generic notice explaining their rights to request an
    exception to a coverage decision when a prescription is denied. It has
    been the experience of our members and beneficiary advocates that this
    information is often not provided by the local or mail order pharmacy,
    leaving the beneficiary to either have to pay for the drug without any
    coverage or go without the drug. The College recommends that Congress
    provide CMS with increased authority (including facilitating its
    ability to enact financial penalties) to ensure that this information
    is routinely provided in a timely manner.
          Congress should pass legislation that requires plans to
    give deference to the supporting statement of the medical expert.
    Current language in the Medicare statute indicates that physician
    statements are appropriate support for formulary exceptions and CMS
    guidance to plans indicates that these statements should be given
    significant consideration. Unfortunately, these statements are not
    supported within the Part D appeal regulations that instruct that
    physician's opinions do not control determinations about requests for
    exceptions. This opens the door for too many decisions on care to be
    made for financial reasons, as opposed to medical considerations. It is
    recommended that the Part D language be changed to give deference to
    the statement of the medical expert--the physician. The treating
    physician's clinical judgment should be over-ruled only by reference to
    objective, verifiable medical evidence.
          Congress should pass legislation that provides Part D
    covered beneficiaries with increased access to ``off-label'' use
    medications. Physicians frequently prescribe medications for
    indications not expressly approved by the Federal Drug Administration
    for inclusion on the drug's label and patient insert information. Off-
    label medications are often used in the treatment of many chronic and
    progressive medical conditions (e.g. cancer, multiple sclerosis.) The
    current Medicare Part D statute allows plans to deny coverage for off-
    label indications that are not expressly recognized in a limited number
    of specified drug compendia. This restriction is much more limited than
    prescribed under Medicare Part B policy \5\ and more restrictive than
    standards employed by most private sector health plans. The College
    recommends that the language be changed to be consistent with the less
    restrictive language found within the Medicare Part B regulations,
    which takes into consideration the major drug compendia, authoritative
    medical literature and/or accepted standards of medical practice.
    ---------------------------------------------------------------------------
        \5\ Centers for Medicare and Medicaid Services. Medicare Benefit
    Policy Manual. Chapter 15, Section 50.4.2. Accessed at http://
    www.cms.hhs.gov/manuals/Downloads/bp102c15.pdf on 19 June 2007
    ---------------------------------------------------------------------------
          Congress should direct CMS to identify selected Part B
    and Part D overlap drugs and direct plans to always cover them under
    Part D. There are a significant number of medications that can be
    covered under either Medicare Part B or Part D. The decision depends
    upon such factors as patient diagnosis, timing of treatment, use of
    durable medical equipment and the location of dispensing the
    medication. Often, Part D plans will delay approval of these
    ``overlap'' medication under a prior authorization restriction until
    additional information is obtained. This delays the beneficiary from
    receiving the medication in a timely manner, and provides substantial
    unnecessary burden on both the pharmacist and the prescribing
    physician. Recently, MedPAC \6\ has recommended that Congress direct
    CMS to identify selected Part B and Part D overlap drugs and direct
    plans to always cover them under Part D. Furthermore, MedPAC indicated
    that the identified drugs should be low cost and covered under Part D
    most of the time. The College supports this recommendation.
    ---------------------------------------------------------------------------
        \6\ MedPAC. Issues in Medicare coverage of drugs. Report to
    Congress: Promoting Greater Efficiency in Medicare (June 2007).
    Accessed at http://medpac.gov/chapters/Jun07--Ch07.pdf on 19 June 2007
    ---------------------------------------------------------------------------
          Congress should pass legislation to permit coverage for
    appropriate preventive vaccines under Medicare Part B instead of Part D
    and not include the cost of these vaccines within the Medicare
    sustainable growth rate (SGR) calculation. The Medicare Modernization
    Act specified that all new preventive vaccines be covered under
    Medicare Part D. This legislation did not affect the three preventive
    vaccines that were already covered under Medicare Part B, i.e.
    hepatitis B, pnuemoccocal and influenza vaccine. Physicians,
    medications suppliers and beneficiaries are all familiar with the well
    established methods of paying for the vaccines and its administration
    under Medicare Part B. While various approaches have been suggested
    (delivery through a specialty pharmacy, use of a web portal), there is
    no proven effective method to pay providers for the cost of the vaccine
    and its administration through the Part D plans. This problem has
    recently been highlighted by the introduction of a herpes-zoster
    vaccine into the market place. In most cases, beneficiaries who
    currently want this vaccine are required to pay their physician the
    full cost of the vaccine (approximately $200) and then attempt to be
    reimbursed for this cost by the Part D plan. This is clearly not an
    efficient method, and places the beneficiary at substantial risk of not
    receiving adequate reimbursement from the plan. Furthermore, our
    members have reported on beneficiary reluctance to follow their advice
    to take this preventive vaccine due to the high, up-front and at risk
    expense. In response to this problem, MedPAC has recently recommended
    that Congress should permit coverage for appropriate preventive
    vaccines under Medicare Part B instead of Part D.\7\ The College
    supports this recommendation that will increase access to these newly
    approved preventive vaccines with the additional stipulation that the
    costs of these medications are not included as part of the Medicare
    sustainable grow rate (SGR) calculation used to determine rates under
    the Medicare Physician Fee Schedule. These costs should not contribute
    to the unrealistic more than 40 % cut in physician fees already
    projected from the faulty and ineffective SGR methodology over the next
    decade.
    ---------------------------------------------------------------------------
        \7\ MedPAC. Issues in Medicare coverage of drugs. Report to
    Congress: Promoting Greater Efficiency in Medicare (June 2007).
    Accessed at http://medpac.gov/chapters/Jun07--Ch07.pdf on 19 June 2007

        In summary, the addition of prescription drug coverage to the
    Medicare benefit significantly contributes to improved health and
    quality of life for our senior and disabled Americans. The College
    believes that the implementation of the following recommendations will
    further ensure that access to these important medications is available
    to all beneficiaries and that the most effective medication is received
    ---------------------------------------------------------------------------
    in a timely manner. These recommendations are:

          Congress should pass legislation to facilitate increased
    enrollment for the Part D low income subsidy (LIS).
          Congress should pass legislation to make the Part D
    benefit less complex and provide both beneficiaries and their
    physicians with more essential information to make plan choice and
    treatment decisions. More specifically, it is recommended that:
          Congress should consider legislation to reduce the number
    of plan choices available to beneficiaries.
          Congress should provide the Centers for Medicare and
    Medicaid Services (CMS) with the authority (including the ability to
    enact financial penalties) to ensure that all Part D plans make all
    essential formulary information, including prior authorization and
    utilization management information, easily accessible at least through
    placement on their web site and through contact with a designated plan
    representative.
          Congress should provide increased funding to the State
    Health Insurance Assistance Programs (SHIPs) in each state. Congress
    should pass legislation to improve the Part D benefit's exception and
    appeals process. More specifically, it is recommended that:
          Congress should pass legislation to simplify and make
    more uniform the exceptions and appeals process.
          Congress should provide CMS with the authority to ensure
    that beneficiaries receive essential information in a timely manner to
    challenge a plan's coverage decision.
          Congress should pass legislation that requires plans to
    give deference to the supporting statement of the medical expert.
          Congress should pass legislation that provides Part D
    covered beneficiaries with increased access to ``off-label'' use
    medications.
          Congress should direct CMS to identify selected Part B
    and Part D overlap drugs and direct plans to always cover them under
    Part D.
          Congress should pass legislation to permit coverage for
    appropriate preventive vaccines under Medicare Part B instead of Part D
    and not include the cost of these vaccines within the Medicare
    sustainable growth rate (SGR) calculation.

               Statement of Assisted Living Federation of America
        Mr. Chairman and members of the Subcommittee, thank you for
    allowing me to submit this written testimony.
        In 2003, Congress enacted one of the most substantive changes to
    Medicare in recent memory, the Medicare Modernization Act (MMA). The
    prescription drug benefit (Part D) contained within the MMA has been
    well documented in providing access and affordability of prescription
    medicines to America's seniors. However, while Part D has brought
    control over their own health care into many seniors' own hands, Part D
    needs one significant change that will benefit over 100,000 seniors.
        Recognizing the vulnerability of very low-income people living in
    long-term care settings such as nursing homes, The U.S. Congress
    exempted ``dual eligibles'' (people eligible for both Medicare and
    Medicaid) living in nursing homes from any co-payment for Part D
    prescription drugs.
        Unfortunately, the MMA did not eliminate co-payments for dual
    eligible residents of assisted living, even though the residents of
    assisted living communities are usually ``nursing-home eligible' by
    definition and have similar needs for medications. That is, while the
    individual living in a nursing home is exempt from co-payments for Part
    D prescription drugs, the individual living in an assisted living
    community is forced to pay the same co-payments for the same Part D
    prescription drugs.
        Like nursing home residents on Medicaid, the over 100,000 assisted
    living residents (dual eligible) have very limited financial resources.
    Their personal needs allowances average $60 a month. For many of these
    assisted living residents, the amount of their Part D co-payments
    exceeds their monthly personal needs allowances.
        Residents in nursing homes and assisted living use a similar number
    of prescriptions--approximately 8-10, according to recent studies. Even
    Part D co-payments of $1-$5 per prescription can present financial
    hardships for dual eligible assisted living residents, and, as we have
    heard from communities across the country, could impede people from
    receiving needed medications.
        More and more, seniors are looking to assisted living as their
    preferred senior housing option. Time and again, we hear from seniors
    who are concerned about being forced to receive their long term care in
    an institutional setting such as a nursing home. As it stands, the MMA
    is effectively punishing those dual eligible seniors who have chosen
    assisted living--a community based alternative to nursing homes.
        Congressional staff from both sides of the aisle have indicated to
    us that the inconsistency in the MMA described above occurred for no
    other reason than simple oversight on the part of proponents of this
    meaningful legislation.
        The stated focus of this hearing was to focus on Medicare Part D,
    ongoing beneficiary protection issues in the new program, and possible
    statutory changes necessary to improve the program for beneficiaries
    and taxpayers.
        Mr. Chairman and members of the Subcommittee: It is not often that
    we have an opportunity to go back and correct a mistake. You have,
    however, an opportunity to do just that. Over 100,000 dual eligible
    seniors in assisted living would be grateful for your swift action to
    provide this relief with a simple statutory change that corrects this
    oversight.
        Thank you again for this opportunity.

                          Statement of Consumers Union
        Thank you for holding today's hearing on Beneficiary Protections in
    Medicare Part D.
        Consumers Union supports a number of improvements in the operation
    of the program that will help consumers deal with the confusing array
    of choices and administrative complexities in the current law.
        But there is one key consumer protection that simply has not
    received enough attention--the apparent `bait and switch' occurring for
    some beneficiaries when it comes to plan prices. Our research the past
    19 months has found that even though an individual may shop for a plan
    to find the best coverage for the drugs they take, the plan they select
    may dramatically increase its prices the following year, and the
    beneficiary is helpless because they are locked into that plan.
        Consumers Union has been monitoring the price of five randomly
    selected drugs[1] in a zip code in five of the most populous states
    since December, 2005, and we continually see dramatic swings in the
    price of that package of drugs to consumers.
        We looked at 60 plans in Texas zip 75135 that offered coverage in
    February 2007 and what the estimated annual cost to an enrollee was for
    those same drugs this June. Thirty-two (32) plans increased in cost, 20
    stayed the same, and 8 decreased. The average increase was $195, with
    the range of changes varying between $3 and $480. A 480 increase is
    equivalent to a 19.8% increase in just one third of a year. While most
    of the plans increased in cost, a few decreased. Of the eight plans
    that decreased in cost, most only had minor changes, although there
    were two high-priced plans that decreased by about 25%.
        In New York zip 00501, there were 61 plans offering coverage in
    February 2007 and we followed these plans until June. Thirty-five (35)
    plans increased in cost, 17 stayed the same, and 9 decreased. The
    average increase was $178, with the range of changes varying between $2
    and $603. For the plan that increased $603, this is equivalent to a 26%
    increase. As in the case with Texas, most of the plans increased in
    cost, and only a few decreased. The majority of the plans that
    decreased in cost had minor price changes, the largest being 7.7%.
        The good news is that some plans do not increase prices. Consumers
    need to know which plans offer the most price stability. We believe CMS
    needs to do a better job in monitoring, disciplining and not renewing
    those plans that offer a low price in the fall open enrollment season,
    yet raise the price on a package of commonly prescribed drugs in the
    following months at a rate higher than medical inflation.
        We urge you to consider legislation to require plans to tell
    consumers what the price change has been during the year on a package
    of the 100 most commonly prescribed generics and 100 most commonly
    prescribed brands.\1\ Plans which increase costs on this broad package
    of drugs more than a certain percentage--such as the medical economic
    index--should not be permitted to renew in the following plan year.
    Another option is to allow people who enroll in a plan which has large
    price increases to leave at any time and join another plan with more
    price stability.
    ---------------------------------------------------------------------------
        \1\ Lipitor 10mg; Altace 10 mg; Celebrex 200 mg; nifedipine ER 30
    mg; Zoloft 100 mg.
    ---------------------------------------------------------------------------
        These measures would greatly enhance consumers' ability to make
    cost-effective choices in selecting a Medicare Part D plan. And they
    also would hold plans accountable for controlling spiraling drug costs.
    Thank you for your consideration of these views.
                Sincerely,
                                                        William Vaughan
                                                  Senior Policy Analyst
        With an exceptions process, of course, for unavoidable plant
    closures and supply disruptions due to accident, disasters, etc.

                 Statement of Long Term Care Pharmacy Alliance
    INTRODUCTION
        Chairman Stark, Ranking Member Camp, and Distinguished Members of
    the Subcommittee, the Long Term Care Pharmacy Alliance (LTCPA)
    \1\para.mmends your leadership in holding this important hearing to
    address issues related to beneficiary protections in Medicare Part D
    plans. LTCPA appreciates the opportunity to share the experiences and
    perspectives of its member pharmacies as the Committee considers ways
    to strengthen the Part D program for beneficiaries.
    ---------------------------------------------------------------------------
        \1\ The Long Term Care Pharmacy Alliance (LTCPA) represents the
    nation's major long-term care pharmacy providers. Together, LTCPA's
    members serve more than 1.5 million people--including more than two-
    thirds of all nursing facility residents--through networks of nearly
    500 pharmacies nationwide.
    ---------------------------------------------------------------------------
        More than 1.6 million Medicare beneficiaries reside in long-term
    care (LTC) facilities nationwide. These patients, who can no longer
    care for themselves, are among the most vulnerable individuals served
    by the new Medicare drug benefit program. They are typically older, may
    suffer multiple chronic conditions, and are frequently cognitively
    impaired.
        LTCPA's member pharmacies dispense medications and provide
    specialized services tailored to the needs of patients in nursing
    homes, assisted living facilities, hospice programs, and similar
    institutional sites of care. Since passage of the 2003 Medicare
    Modernization Act (MMA), LTC pharmacies have been working with health
    care professionals, patient advocates, private plans and the Centers
    for Medicare and Medicaid Services (CMS) to make the new Medicare drug
    benefit responsive to the needs of this frail elderly population.
        Congress largely tasked CMS with defining the details of this
    benefit for the LTC segment of the Medicare population. The Agency has
    made considerable strides, operating within its understanding of its
    existing authorities, to make the Medicare Part D program ``work'' for
    beneficiaries residing in LTC facilities. However, LTC residents
    continue to face significant challenges in obtaining full access to
    medically necessary drugs under Part D.
        To strengthen the Medicare drug benefit in the LTC setting, LTCPA
    respectfully submits the following recommendations for consideration.
    We look forward to working closely with members of the Ways and Means
    Committee in improving protections for Medicare beneficiaries under
    Part D.
    RECOMMENDATIONS
    I. LTC Standards For Part D Plans
        In implementing the new drug benefit, CMS has relied heavily on
    subregulatory guidance to encourage plans to comply with its stated
    policies. In March 2005, the Agency released two guidance documents
    designed to make Part D more responsive to the particular needs of
    enrollees residing in LTC settings:

          Long-Term Care Guidance--Established ten core service and
    performance criteria for LTC pharmacies participating in plans'
    networks, and encouraged plans to incorporate these criteria into their
    contracts with LTC pharmacies.
          Transition Guidance--Established appropriate procedures
    for plans to ensure patients have access to needed medications upon
    entering a LTC facility.

        These guidance documents include important protections for
    patients; however, they do not have the force of regulation or law.
    Plans' compliance may lessen as the program matures and Part D payments
    change or the guidance becomes ``lost to history'' over time.
    Recommendation: LTCPA urges the Subcommittee to codify CMS guidance
            documents as enforceable standards for Part D plans serving LTC
            residents.
    II. Assistance For LTC Residents
        More than 70 percent of LTC residents are dually eligible for
    Medicare and Medicaid. These dual eligible beneficiaries were randomly
    auto-enrolled into Part D benchmark plans if they did not select a plan
    on their own.
        However, Part D benchmark plans in each region vary widely in their
    coverage of drugs commonly dispensed to nursing home residents. In
    every region, there are benchmark plans that either do not have several
    common drugs on formulary or that subject them to drug utilization
    management controls, including prior authorization.
        While LTC residents are eligible for a special enrollment period
    (SEP) to change plans, most do not know about this provision. Many also
    lack the cognitive ability or knowledge to evaluate complex plan
    offerings, but do not have a guardian or family member nearby to help.
        Unfortunately, CMS Marketing Guidelines currently bar health care
    professionals (including physicians, nurses and pharmacists) from
    providing advice to nursing home residents in selecting a specific Part
    D plan. Further, CMS defines nursing homes as ``non-benefit providing
    third parties'' and prohibits nursing home administrators and staff
    from discussing specific plans with their residents.
        This rule simply defies common sense. Nursing home staff and
    patients' physicians are most likely to know which Part D plans in a
    given region offer appropriate coverage for residents of LTC
    facilities. Absent an effective ``gag order'' from CMS, professional
    caregivers in nursing homes are well equipped to provide objective
    information about coverage options to residents who enter the facility,
    become eligible for Medicare, or desire to change plans.
    Recommendation: LTCPA urges the Subcommittee to authorize nursing
            facility caregivers and staff and residents' physicians to
            assist LTC residents in Part D plan selection and enrollment.
    III. Immediate Enrollment for LTC Residents
        Current CMS regulations treat LTC residents identically to other
    beneficiaries for enrollment purposes under Part D. That is, if a
    beneficiary enrolls in a new Part D plan, the new enrollment is
    effective the first of the following month. Prior to the Part D
    program, however, Medicaid drug coverage for dual eligibles residing in
    nursing facilities took effect on the date of application.
        The CMS rule is highly problematic for LTC residents, because
    medication needs significantly change between the ambulatory and
    nursing home setting. A beneficiary will frequently change plans in
    that situation, forcing both the LTC facility and the LTC pharmacy to
    deal with a variety of different formularies and different drug
    utilization management procedures during the course of a single month.
        These administrative hurdles put nursing facilities at risk for
    citations for failure to provide all necessary medications. LTC
    pharmacies also are at risk for failing to undertake their contractual
    obligations to provide prescription medications to residents in a
    timely fashion.
    Recommendation: LTCPA urges the Subcommittee to establish a process for
            Medicare Part D coverage to begin immediately upon plan
            enrollment for beneficiaries entering a LTC facility and for
            LTC residents who change their plan enrollment.
    IV. Protections For Assisted Living Residents
        In its regulations implementing Part D, CMS incorporated a
    preexisting definition of ``long-term care facility.'' This definition
    did not include assisted living facilities, and citing a lack of
    statutory authority, the Agency did not expand its scope.
        As a result, assisted living residents lack the same protections
    extended to nursing home residents under Part D. Yet dual eligible
    residents of assisted living facilities are also low-income and lack
    the resources to make co-payments under Part D. While they may be able
    to function in a less restrictive care setting, many assisted living
    residents nonetheless require specialized pharmacy services to meet
    their complex medication needs.
        CMS has correctly recognized that many residents of assisted living
    facilities require the same core service and performance standards
    reflected in its Long-Term Care Guidance. Likewise, the Agency and
    federal policy-makers have actively promoted home and community-based
    services as an alternative to care in nursing facilities.
    Recommendation: LTCPA urges the Subcommittee to extend Part D's
            exemption from co-payments to include Medicare beneficiaries
            residing in assisted living.
    V. LTC Pharmacy Access
        Part D plans are not currently required to demonstrate that they
    have an adequate LTC pharmacy network with the experience, capacity,
    and contractual access to beneficiaries to fully serve all LTC
    residents in a given region. While CMS used the TriCare standards to
    establish network adequacy criteria for retail pharmacies serving
    ambulatory beneficiaries, the Agency did not set mandatory,
    quantifiable standards for plans' LTC pharmacy networks.
        Instead, CMS simply asks that the plans ``attest'' they have
    sufficient numbers of pharmacies in their network that could meet
    certain performance and service criteria. Moreover, the current LTC
    pharmacy access standard fails to include the Agency's own definition
    of a LTC pharmacy as ``a pharmacy owned by or under contract with a LTC
    facility to provide prescription drugs to the facility's residents'' in
    its regulations.
        CMS cannot currently confirm whether the pharmacies in a plan's LTC
    network can adequately serve the number of LTC pharmacy beds in the
    region, or whether those pharmacies have any actual experience
    providing services to residents of LTC facilities.
    Recommendation: LTCPA urges the Subcommittee to establish a LTC network
            adequacy standard to ensure all Part D plans have the capacity
            to serve at least 90 percent of their enrollees who reside in
            LTC facilities.
    VI. Protecting LTC Beneficiaries From Improper Cost-sharing
        Under Part D, dual eligible beneficiaries residing in LTC
    facilities are exempt from paying co-payments for their prescription
    drugs. However, since the launch of Part D, and continuing today, CMS
    has failed to accurately identify large numbers of dual eligible LTC
    residents and provide complete and accurate data to Part D plans. Some
    pharmacies report that CMS and Part D plan databases continue to fail
    to identify as many as 20 percent of dual eligible beneficiaries in
    some nursing homes, and there is little evidence that progress is being
    made to reduce that failure rate.
        As a result, most Part D plans have improperly assessed co-payments
    for prescription drugs provided to large numbers of dual eligible LTC
    residents. Those co-payments have been--and continue to be--withheld
    from payments owed by Part D plans to LTC pharmacies. To date, tens of
    millions of dollars have been wrongly withheld. LTC pharmacies have
    sought to collect the unpaid amounts directly from Part D plans,
    recognizing that dual eligible LTC residents are not liable for co-
    payments. Given the enormous financial strain of carrying this debt,
    however, the situation has become untenable for LTC pharmacies and must
    be resolved.
        CMS has advised plans that they can accept a LTC pharmacy's ``best
    available evidence'' that a beneficiary is a dual eligible LTC resident
    in order to resolve co-payment claims. Such evidence could include a
    Part D enrollee's Medicaid and Medicare numbers, the date the
    beneficiary entered the LTC facility and an attestation from the LTC
    pharmacy that it did not collect a co-payment.
        Unfortunately, CMS has failed to develop and enforce clear
    procedures for using ``best available evidence'' to resolve past claims
    and to prevent wrongly assessed co-payments in the future. As a result,
    most Part D plans have not acted on the Agency's guidance, and LTC
    pharmacies have had very limited success in recovering improperly
    withheld co-payments from Part D plans.
    Recommendation: LTCPA urges the Subcommittee to direct CMS to develop
            and implement procedures to identify dual eligible LTC
            residents who are exempt from cost-sharing and to protect those
            beneficiaries from improperly assessed co-payments.
    VII. LTC Plan Quality
        CMS collects data from Part D plans on a number of variables (e.g.,
    aggregate counts of the number of exceptions requests, grievances,
    etc.). The Agency relies on the data to report to Congress on various
    aspects of the ongoing implementation and operation of the Part D
    program.
        However, the MMA did not require any separate reporting by CMS or
    the plans regarding Part D services to LTC residents. Neither CMS nor
    the plans currently report the number of enrollments and
    disenrollments, the number of LTC residents' exceptions requests that
    were approved or disapproved, or the number of appeals and grievances
    filed in the LTC setting.
    Recommendation: LTCPA urges the Subcommittee to direct CMS to collect
            data and report annually to Congress on the quality of Part D
            plans' drug coverage for LTC residents.
    CONCLUSION
        LTCPA makes the following recommendations to strengthen Part D in
    the LTC setting:

          Codify CMS guidance documents as enforceable standards
    for Part D plans serving LTC residents;
          Authorize nursing facility administrators and staff and
    patients' physicians to assist LTC residents in Part D plan selection
    and enrollment;
          Establish a process for Medicare Part D coverage to begin
    immediately upon plan enrollment for beneficiaries entering a LTC
    facility and for LTC residents who change their plan enrollment;
          Extend Part D's exemption from co-payments to include
    Medicare beneficiaries residing in assisted living facilities;
          Establish a LTC network adequacy standard to ensure all
    Part D plans have the capacity to serve at least 90 percent of their
    enrollees who reside in LTC facilities;
          Direct CMS to develop and implement procedures to
    identify dual eligible LTC residents who are exempt from cost-sharing
    and to protect those beneficiaries from improperly assessed co-
    payments; and
          Direct CMS to collect data and report annually to
    Congress on the quality of Part D plans' drug coverage for LTC
    residents.

        The nation's LTC pharmacies are committed to ensuring the safe and
    timely delivery of necessary medications and specialized pharmacy
    services to their patients. To that end, LTCPA welcomes the opportunity
    to work with members of the Ways and Means Committee to improve
    Medicare prescription drug coverage for beneficiaries residing in LTC
    facilities.
    Submitted by:
    Darrell McKigney
    Acting Executive Director
    Long Term Care Pharmacy Alliance

                       Statement of Mental Health America
        Mental Health America is dedicated to helping all people live
    mentally healthier lives. Our network of over 320 state and local
    affiliates nationwide includes advocates, consumers of mental health
    services, family members of consumers, providers of mental health care,
    and other concerned citizens--all dedicated to improving mental health
    care and promoting mental wellness. Last November, we changed our name
    from the National Mental Health Association to Mental Health America in
    order to better communicate how fundamental mental health is to overall
    health and well-being.
        Many Medicare beneficiaries struggle with mental illnesses, often
    alone and without medications that have proven widely effective and
    that would likely ease their symptoms and lead to recovery. Some 20
    percent of older Americans experience mental disorders, such as anxiety
    disorders, mood disorders (including depression and bipolar disorder),
    and schizophrenia.\1\ However, two-thirds of older adults living in the
    community who need psychiatric services do not receive them.\2\
    Furthermore, individuals receiving Medicare because of a disability
    also frequently experience mental illness. According to a survey by the
    Kaiser Family Foundation, psychiatric disorders, such as schizophrenia,
    bipolar disorder, and depression, were the second most commonly
    reported conditions among beneficiaries with disabilities,\3\ and over
    two-thirds of Medicare beneficiaries with disabilities say they often
    feel depressed.\4\
    ---------------------------------------------------------------------------
        \1\ Administration on Aging, U.S. Department of Health and Human
    Services, Older Adults and Mental Health: Issues and Opportunities,
    2001, p. 9.
        \2\ Medicare Rights Center, Medicare Facts and Faces, October 2001.
        \3\ The Henry J. Kaiser Family Foundation, Understanding the
    Health-care Needs and Experiences of People with Disabilities: Findings
    from a 2003 Survey, December 2003, p. 4.
        \4\ Ibid.
    ---------------------------------------------------------------------------
    Strengthen Protection for Six Drug Classes of Clinical Concern
        We strongly support the policy established in sub-regulatory
    guidance by the Centers for Medicare and Medicaid Services (CMS)
    directing Medicare Part D prescription drug plans to cover all or
    substantially all medications in six key categories, including anti-
    depressants, anti-psychotics, and anti-convulsants. However, not all
    beneficiaries in need of these medications have benefited from this
    policy presumably due to a failure by certain plans to abide by this
    sub-regulatory guidance. Failure of this policy to function as intended
    has had a particularly harmful impact on dual eligible beneficiaries. A
    recent survey by the American Psychiatric Institute for Research and
    Education (APIRE) of psychiatrists treating dual eligibles found that
    in 2006 over half of the dual eligible psychiatric patients studied had
    at least one problem accessing their medications and 69 percent of
    patients with access problems experienced a significant adverse
    clinical event, such as an emergency room visit, hospitalization,
    homelessness, or incarceration in jail or prison (compared to 40
    percent among patients with not access problems).\5\
    ---------------------------------------------------------------------------
        \5\ American Psychiatric Institute for Research and Education, The
    Impact of Medicare Part D on Medication Access and Continuity:
    Preliminary Findings from a National Study of Dual Eligible Psychiatric
    Patients.
    ---------------------------------------------------------------------------
        Clearly, this policy requiring coverage of the six key classes must
    be strengthened to improve plan compliance. Moreover, because this
    policy has been established through sub-regulatory guidance it must be
    renewed every year which gives the Part D plans the opportunity to
    exert substantial pressure on CMS each year to revoke this critical
    protection. We urge the Committee to develop and work toward enactment
    of legislation codifying the protections CMS has established for the
    key drug classes of clinical concern.
        Comprehensive coverage of medications in these categories is
    crucial because of the often idiosyncratic responses to different
    medications within these classes, which are based on a wide range of
    individual factors. The effect of these drugs can vary based on the age
    of the individual consumer, their genetic and cultural background,
    whether the consumer has any co-occurring illnesses, and even
    variations in metabolic rate. These medications can have distinctive
    effects on cognitive functioning that vary among individuals and cause
    idiopathic side-effects that greatly influence medication tolerability
    in individual consumers. As a result, these drugs are not generally
    interchangeable and not suitable for common utilization management
    techniques that focus solely on cost.
        Thus, we are concerned by several of the exceptions CMS has made to
    the policy regarding the six key classes. We are concerned, in
    particular, by the exception to allow plans to exclude medications when
    another medication with the same active ingredient is included on the
    plan's formulary. Medications that share the same active ingredients
    often have differing side effects, profoundly affecting whether a
    consumer continues treatment. We also oppose the exception to allow
    plans to exclude extended release versions of these protected classes
    of medications. Extended release versions of psychotropic medications
    can greatly facilitate adherence to treatment regimens by reducing the
    frequency or severity of the side effects associated with some of these
    medications--side effects that can themselves be disabling.
        In addition, we have urged CMS to prohibit or severely limit the
    application of dosage or quantity limits to medications in the
    protected classes. Quantity limits on mental health medications can
    have particularly harmful effects on consumers. Even a small decline in
    the use of mental health medications can cause deterioration of an
    individual's health and increased emergency room visits.
        Finally, we strongly support the CMS policy that plans must not
    apply prior authorization or step therapy requirements to beneficiaries
    already taking these protected medications, and that plans are to
    assume an enrollee is already taking a medication if it cannot be
    determined at the point of sale whether they are requesting a refill or
    a new fill of a prescription. Adherence to this policy by Part D plans
    is vitally important to prevent beneficiaries from being forced to
    switch mental health medications which can have serious adverse
    effects. However, the APIRE survey found that approximately 28 percent
    of the dual eligible psychiatric patients studied were previously
    stabilized on a medication but had to switch to a different medication
    than was clinically desirable. Thus, we urge the Committee to include
    in legislation codifying the protections for the six key drug classes,
    restrictions on the use of prior authorization and step therapy
    requirements with these medications.
    Repeal Exclusion of Benzodiazepines and Barbiturates from Part D
        Although anti-depressants, anti-psychotics, and anti-convulsants
    are essential categories of medications for treating mental illnesses,
    there are other psychotropic medications that are also commonly used to
    treat mental disorders, including benzodiazepines and barbiturates.
    Unfortunately, the Medicare Modernization Act excluded coverage of
    these medications from the Part D benefit. Benzodiazepines are highly
    effective treatments for acute anxiety in the elderly, for panic
    disorders, and for short term treatment of insomnia. Abrupt
    discontinuation of these medications can result in severe withdrawal
    symptoms. The APIRE survey found that 28 percent of patients studied
    had problems accessing benzodiazepines and 38 percent of these patients
    were hospitalized. Thus, we urge the Committee to act on legislation
    repealing the exclusion of benzodiazepines and barbiturates from the
    Part D benefit.
        Although most states cover benzodiazepines and barbiturates through
    their Medicaid programs for duals eligibles, requiring these very low-
    income, vulnerable beneficiaries to use a different program just to
    access these particular medications is very confusing and many will not
    be aware of this special provision for these medications. In addition,
    this approach creates additional administrative barriers to accessing
    these medications. And, finally, although most states do cover
    benzodiazepines and barbiturates for some Medicaid beneficiaries, many
    limit this coverage only to those who are categorically eligible and
    thus exclude the medically needy population who spend down their
    incomes on medical expenses to become eligible for Medicaid. In
    addition, some states do not cover all benzodiazepines and
    barbiturates.
        We commend Chairman Stark and other members of the Committee for
    your leadership in introducing legislation to address the shortcomings
    in mental health care under Medicare and urge you to build on those
    efforts by codifying into law the CMS policy requiring Part D plan
    coverage of all medications in the six drug classes of clinical concern
    and by repealing the exclusion of benzodiazepines and barbiturates from
    Part D.

            Statement of National Association of Drug Chain Stores,
                              Alexandria, Virginia
    Beneficiary Protections in Medicare Part D
        Chairman Stark, Ranking Member Camp, and members of the House Ways
    and Means Subcommittee on Health, the National Association of Chain
    Drug Stores (NACDS) is pleased to submit this statement for this
    important hearing on current beneficiary protections in the
        Medicare Part D prescription drug program. NACDS represents
    companies that operate more than 35,000 community retail pharmacies in
    the United States. We are the primary providers of pharmacy services to
    Medicare beneficiaries.
        NACDS believes that the new Medicare Part D prescription drug
    benefit has helped to provide prescription drug coverage for millions
    of seniors who previously didn't have such coverage. We are also
    pleased that many of the pharmacists that work in chain-operated
    pharmacies have helped to make this program a success by educating
    beneficiaries about the program. Many pharmacies have also weathered
    some difficult implementation issues in the early days of the program.
    However, NACDS will continue to work with Congress and CMS to enhance
    the operation of the program for beneficiaries and pharmacists. We
    would like to make specific suggestions to the Committee on
    improvements we believe should be made to the program.
    Establish ``Rolling'' Beneficiary Enrollment Time Frame
        There is nothing more frustrating for a beneficiary or a pharmacist
    than being unable to provide prescription services to a Medicare
    beneficiary who is waiting at the pharmacy counter. Yet, a particular
    enrollment rule in the existing Part D program has the effect of making
    it difficult for pharmacists to provide prescription services in
    certain situations.
        That is because beneficiaries are able to access their Part D
    benefit on the first day of the next month after they enroll, no matter
    how late in the previous month they join a Part D plan or switch plans.
    Thus, a beneficiary who enrolls in a plan during the last week of the
    month would expect to have his or her prescriptions filled in a
    pharmacy by the first day of the next month, and have those
    prescriptions paid for by the plan that he or she just joined.
        However, it is unrealistic to expect that CMS and the chosen plan
    can process the beneficiary's application, confirm eligibility, and
    provide information to the plan and the CMS eligibility verification
    systems--so that it is in the pharmacy system--in such a short
    timeframe.
        Right now, it is supposed to take approximately 10 to 14 days from
    the time of enrollment in a plan, until the time that the data are
    available to the pharmacist. Even if this timeframe is reduced, it
    would remain virtually impossible for important beneficiary billing
    information to be in pharmacy systems by the first of the month if a
    beneficiary enrolls in a plan in the last week of the previous month.
    Such expectations are unfair to the beneficiary, unfair to the
    pharmacist, and will undoubtedly create delays in a patient receiving
    his or her medication. Thus, it is essential that there be more time
    between the submission of an application to a Part D plan and the time
    that the enrollment and billing information can be obtained and active
    at the pharmacy.
        We believe that CMS should consider making enrollments effective at
    the time that the plan delivers all necessary billing information to
    the beneficiary, particularly the standard identification card. This
    might require that a minimum enrollment processing window be
    established (such as 15 or 30 days), which would allow sufficient time
    for the plan to process the application, determine eligibility for any
    low-income subsidies, and ensure that the beneficiary receives all the
    enrollment information, including the identification card. If plans can
    deliver that information to a beneficiary more rapidly than this time
    enrollment processing time period, then the enrollment would become
    effective sooner. Plans should be required to compete on this aspect of
    benefit design so that beneficiaries would be able to use this as
    another criterion in selecting a plan.
        We believe that this enrollment rule for Part D plans should apply
    to beneficiaries that enroll during the annual coordinated election
    periods, during special enrollment periods (such as the dual eligibles
    who can switch plans each month) and continuous enrollment periods.
    Assure Beneficiaries' Access to Retail Pharmacies
        The Medicare Modernization Act (MMA) requires Part D plans to allow
    ``any pharmacy'' that is willing to meet the plan's terms and
    conditions to participate in its network at the time that the pharmacy
    is willing to do so. Therefore, we do not believe that a plan can
    create a term or condition of participation in its contract that
    requires the pharmacy to join the network by a certain date or risk
    being ``locked-out'' of the network for the full plan year. Because we
    understand that some plans are not allowing ``any willing pharmacy'' to
    participate, and since CMS has not made a final determination on this
    matter, we urge Congress to clarify the intent of this provision.
        We believe that a previous refusal by a pharmacy of an offer to
    participate, or the expiration of such an offer, shall not be grounds
    to exclude a pharmacy from participation in a plan's network. In terms
    of assuring beneficiary access to retail pharmacies, this is an
    important provision because there are several situations in which a
    retail pharmacy, which may or may not have been given the chance to
    participate in the establishment of the network, may want to join the
    plan's network.
        These situations include where the pharmacy has changed ownership;
    the pharmacy may be new; the rates paid by the plan may have changed
    since the original contract was proposed, making it more feasible for
    the pharmacy to participate; new beneficiaries might have moved into
    the area which want to use the pharmacy, but the pharmacy did not
    choose to originally participate in the plan; the number of
    beneficiaries enrolled in the plan has increased because enrollment is
    higher than expected or other plans have left the area, increasing the
    number of beneficiaries that want to use the retail pharmacy. There are
    likely other situations.
        We also believe that it was the intent of Congress to require that
    only preferred network retail pharmacies count toward meeting the
    TRICARE pharmacy access requirements, not all pharmacies under contract
    to the plan's network. However, CMS is allowing plans to count both
    preferred and non preferred retail pharmacies toward meeting the
    TRICARE standards.
        Because of the higher cost sharing differentials that plans can
    establish between non preferred and preferred pharmacies, we believe
    that this CMS interpretation can financially disadvantage Medicare
    beneficiaries if the local retail pharmacy closest to them is
    designated as a non preferred pharmacy. For this reason, we also
    support a provision in the PhAIM Act that would require plans, in
    meeting the TRICARE standards, to only count in-network preferred
    pharmacies.
    Assure Beneficiaries Can Obtain ``Extended'' Quantities of Medications
            at Retail Pharmacies
        Given the fair choice of obtaining their prescription medications
    at a retail pharmacy or a mail order pharmacy, beneficiaries
    overwhelmingly choose their local community retail pharmacy. We find
    this factor especially important among older Americans, who appreciate
    the opportunity to talk face to face with their pharmacist about their
    health care and their medications.
        It is for this reason that we believe Congress intended that
    Medicare beneficiaries should be able to obtain an extended day supply
    of Part D medications (such as a 90 day supply) at their local retail
    pharmacy if they wanted to do so. Moreover, Congress said in MMA that
    any difference in charge between obtaining this prescription at a
    retail pharmacy as compared to a mail order pharmacy would be borne by
    the beneficiary. It is important to note that beneficiaries do not pay
    more cost sharing at retail pharmacies than they do at a mail order
    pharmacy for a 90-day supply of medication if the retail pharmacy
    accepts the rate that the Part D plan pays the mail order firm for the
    90-day supply. If the pharmacy cannot accept the mail order rate, but
    negotiates a higher rate with the plan, then the beneficiary pays the
    difference in charge--as required by the MMA--and that should be the
    beneficiary's choice.
        However, this provision is not being implemented consistent with
    Congressional intent. CMS is not requiring plans to allow any retail
    pharmacy in their networks to provide an extended day supply of
    medication. CMS only requires plans to include a sufficient number of
    retail pharmacies in their networks to provide beneficiaries
    ``reasonable'' access to a 90 day supply. However, there is no public
    standard for what constitutes ``reasonable access.'' CMS has said that
    they are monitoring ``complaints'' from beneficiaries regarding whether
    they cannot obtain an extended day's supply at a retail pharmacy.
        But, this lack of an ``objective'' standard creates uneven access
    for beneficiaries among plans in terms of obtaining a 90 day supply at
    their retail pharmacy. Moreover, in spite of our urging them to do so,
    CMS has not published any data about the percentage of all network
    retail pharmacies in each plan that are under contract to provide an
    extended day supply. Beneficiaries should be able to obtain a 90-day
    supply of medication from any retail pharmacy that is willing to
    dispense these quantities. The current CMS policy unfairly penalizes
    beneficiaries who want to obtain their extended day supply from their
    retail pharmacies.
        In addition, to reduce confusion for the beneficiary and help them
    compare benefits among Part D plans, CMS also needs to create a
    standard definition of ``extended day'' supply of medication. Some
    plans define ``extended'' supply as any quantity of drug exceeding a 31
    day supply, some define it as any quantity exceeding a 34 day supply,
    while other use a 90 day supply. NACDS believes that only a 90 day
    supply of medication or greater should be considered an ``extended
    day'' supply.
    Require Prompt Payment and Electronic Funds Transfer (EFT)
        Many retail pharmacies have experienced--and are still
    experiencing--significant financial difficulties as a result of the
    transformation of many of their patients to Medicare Part D plans,
    which generally have ``lower, slower'' payments for prescriptions.
    While we may not want Congress or the Secretary to dictate specific
    reimbursement rates for pharmacies, we believe there are certain steps
    that plans and CMS can take to help improve the cash flow for all
    pharmacies.
        For example, we believe that plans should be required to pay retail
    pharmacies promptly for ``clean'' Part D prescription claims that are
    submitted to the plans (14 days for claims filed electronically and 30
    days for all other claims). Moreover, plans should send payments for
    these claims through a real-time electronic funds transfer system
    (EFT).
        In addition, to assure that pharmacies are being paid appropriately
    for prescription drugs dispensed to Medicare beneficiaries, all Part D
    plans should be required to update their pricing benchmarks (i.e. AWP,
    WAC) on a daily basis. Without these daily updates, pharmacies could be
    underpaid for many prescriptions, especially for brand name drugs.
    Disclose Plan Generic Drug Reimbursement Terms
        The contracts that Part D plans offer to retail pharmacies often
    omit important information about payment rates for generic drugs. Plans
    should more clearly specify how the plans will reimburse retail
    pharmacies for the generic drugs they dispense to beneficiaries, the
    generic drugs to which these reimbursement rates apply, and how often
    these rates will change. It is unfair to ask pharmacies to enter into
    contracts without this information, because it makes it difficult for
    pharmacies to accurately predict the reimbursement they will receive
    from plans for generic prescriptions.
        We also believe that plans should continue to create incentives for
    beneficiaries to ask for--and for pharmacists to dispense--generic
    medications. The generic dispensing rate for Prescription Drug Plans
    (PDPs) has been increasing since the start of the program, and is
    reaching almost 60 percent of all prescriptions. We think this very
    high generic dispensing rate has been achieved because of the
    incentives that beneficiaries have to ask for generics, and the
    incentives that pharmacists have to dispense generics. Pharmacists work
    with patients and their physicians each and every day to find the most
    cost effective therapies that will meet the physician's goals for
    treatment.
    Establish Plan-to-Plan Rx Claim Reconciliation
        Several important claims-related administrative issues need to be
    brought to the attention of Congress. We urge that Congress direct that
    CMS implement a ``plan to plan'' reconciliation process to obviate the
    need for plans to use pharmacies as billing intermediaries. In some
    cases, pharmacies are being forced to refund payments to one plan for
    claims that have been appropriately adjudicated and already paid, only
    to have to chase down and rebill these claims to another plan.
        The need to rebill these claims to other plans occurs frequently
    because many beneficiaries--such as dual eligibles--can change plans
    frequently. In these cases, the new plan billing information may not be
    in the pharmacy computer system when a beneficiary is filling a
    prescription, and the old plan is incorrectly charged. Thus, the
    prescription needs to somehow be correctly charged to the beneficiary's
    new Part D plan.
        These ``reverse and rebill'' claims have become a significant
    administrative burden for many pharmacies. For example, it is often the
    case that the drug for which the claim is reversed is not covered by
    the other plan, or may be covered at a different cost sharing amount or
    payment amount. Pharmacies cannot and should not be caught in the
    middle of this process which primarily results from the fact that CMS
    and plans cannot incorporate accurate billing information into the
    systems fast enough. We ask that you work with us to encourage CMS to
    develop a process that would allow for this plan to plan reconciliation
    and reduce these unnecessary administrative burdens on retail
    pharmacies.
    Move Medicare Part B Drugs to Medicare Part D
        Medicare Part B continues to cover certain outpatient prescription
    drugs that were covered before the development of Medicare Part D.
    These Part B covered drugs include immunosuppressive drugs, certain
    oral cancer drugs, certain oral antiemetic drugs and inhalation drugs.
        However, sometimes these drugs are covered under Part B if used by
    the physician for one medical reason, but Part D if being used for
    another medical reason. Part B also covers certain vaccines, such as
    pneumococcal and influenza vaccines. Part D will also cover vaccines
    that are not covered under Part B, and it is expected that many new
    Part D covered vaccines will be approved over the next few years.
        As you might imagine, pharmacies face significant administrative
    hassles and complexities in determining whether to bill Medicare Part B
    or Part D for a drug that could be covered under either program.
    Appropriate billing for these drugs depends on the medical condition
    for which the drug is being prescribed by the physician.
        Generally, the pharmacist has to call the physician each and every
    time one of these drugs is prescribed to obtain the reason the
    physician is using the drug. This can cause delays in filling
    prescriptions for Medicare beneficiaries. As an interim step, we have
    been working with Part D plans to create special electronic messages
    that are being sent to pharmacies to help them bill the appropriate
    part of the Medicare program. However, to rectify this situation in the
    long term, Congress should consider moving all Medicare Part B oral and
    inhalation drugs to Medicare Part D.
        We support the provision included in last year's tax bill that pays
    pharmacies for the administration of Part D vaccines under Part B for
    2007 and then shifts payment for administration fees to Part D for
    2008. We believe that CMS has developed a workable, practical approach
    to implementing this provision with the result that it will increase
    Medicare beneficiaries' access to Part D covered vaccines.
    Incorporate Pharmacy Quality Indicators into Part D
        Without a doubt, we are disappointed that more Part D plans are not
    offering more robust medication therapy management (MTM) programs and
    that more plans are not using community-based retail pharmacies to
    provide these services. Unfortunately, very little data exists on
    current Part D MTM programs to evaluate how these programs are being
    implemented.
        For example, Part D plans should be required to report to CMS the
    method by which they deliver MTM services to beneficiaries (i.e.,
    retail pharmacies, nurses, call centers), the percentage of MTM
    services delivered through each method, and whether the beneficiary is
    given a choice of provider of MTM services. CMS should report these
    data to help improve the quality of MTM programs.
        The plans should also report the number of retail pharmacies that
    are under contract with Part D plans to provide MTM services. It is
    important to know whether these services are being provided by
    community-based providers or if they are centralized through call
    centers. There is also no requirement that plans report the scope and
    nature of the MTM services that they provide. For example, are plans
    providing special extended counseling, refill reminders, disease-based
    programs or other specialized services? The plans should report the
    services most commonly provided, and the average number of days that
    these services are provided to beneficiaries.
        While we have concerns with the evolution of Part D MTM programs to
    date, we believe that better days are ahead. NACDS is an active
    participant in the PQA, which is an alliance of Part D stakeholders
    that is in the process of designing quality measures for pharmacy
    providers. We commend CMS for launching the PQA last April, and we
    believe that the work of PQA will result in an increase in quality of
    care for Medicare beneficiaries.
        PQA is in the process of developing and validating 35 potential
    measures of pharmacy quality--including in areas of patient adherence
    and patient safety--for such disease conditions as congestive heart
    failure, hypertension, diabetes, and hyperlipidemia. These quality
    measures could be used as the basis of evaluating the quality of care
    provided by pharmacies under Part D, and could ultimately lead to a
    ``pay for performance'' model for pharmacies.
        We urge that CMS expeditiously conduct demonstration projects on
    the measures that are tested and validated, and seek to begin to
    incorporate these measures into the Part D program in the near future.
    Pharmacy recognizes that its value in the health care system is
    dependent on demonstrating that it can bring value and an increase in
    quality to the health care system and the lives of the patients that we
    serve.
        Mr. Chairman, we thank you again for calling this hearing and look
    forward to working with you on making improvements to the Medicare Part
    D program.

                Statement of National Center for Assisted Living
        The National Center for Assisted Living (NCAL) is the assisted
    living voice of the American Health Care Association (AHCA). On behalf
    of NCAL and AHCA, I would like to thank the Committee for this
    opportunity to raise an issue of vital importance to America's seniors,
    particularly frail elderly people with very low incomes. AHCA/ NCAL is
    a non-profit federation of affiliated state health care organizations,
    together representing nearly 11,000 non-profit and for-profit nursing
    facilities, assisted living residences, sub-acute centers, and homes
    for persons with developmental disabilities. NCAL represents more than
    2,400 assisted living facilities providing long term care services to
    about 108,000 residents.
        With Medicare Part D now in its second year, it is clear that the
    program has helped millions of seniors and people with disabilities
    gain access to needed medications. However, Medicare Part D needs to be
    modified so that frailest dually eligible beneficiaries (those covered
    by both Medicare and Medicaid) are treated equally. We believe that an
    existing gap in Medicare Part D coverage may well have been a mistake
    of omission made as policymakers put together this complex legislation.
        Recognizing the vulnerability and special needs of very low-income
    people living in long term care facilities, the Medicare Modernization
    Act of 2003 exempted dual eligible beneficiaries living in ``long term
    care facilities'' from any cost-sharing for Part D prescription drugs.
    Technically, under the Medicare Part D program, the Centers for
    Medicare & Medicaid Services (CMS) defines a long term care facility as
    a nursing facility, an intermediate care facility for people with
    mental retardation and developmental disabilities, or an inpatient
    psychiatric hospital.
        Unfortunately, the MMA legislation did not extend the waiver of co-
    payments for prescriptions to dual eligible residents of assisted
    living/residential care (AL/RC) facilities and others in home and
    community-based settings (HCBS), despite the fact that this population
    may be eligible for nursing home care and has similar needs,
    vulnerabilities, and income limitations. Under the Part D program, dual
    eligible assisted living residents and others in HCBS must make co-
    payments of $1.00-$5.35 in 2007, with the exact amount depending on a
    person's income and whether a medication is generic. Because of their
    very low income (often just a few dollars in a personal needs
    allowance), these co-payments can present financial hardships for dual
    eligible residents and can impede them from receiving necessary
    medications. Requiring these co-payments is also inconsistent with
    efforts to expand Medicaid-covered long term care options--including
    HCBS--for our nation's most vulnerable citizens who had historically
    only received care in nursing homes. Under current law, these dual
    eligible residents automatically receive reduced Part D benefits by
    choosing to live at home or in an AL/RC facility rather than in a
    nursing home.
        AHCA/NCAL thank Senator Gordon Smith (R-OR) and the nine co-
    sponsors--Senators Jeff Bingaman (D-NM), Barbara Boxer (D-CA), Sherrod
    Brown (D-OH), Maria Cantwell (D-WA), Hillary Clinton (D-NY), Susan
    Collins (R-ME), Blanche Lincoln (D-AR), Bill Nelson (D-FL), and John
    Kerry (D-MA)--who have introduced bipartisan legislation that would
    provide relief to this group of frail elderly individuals. The Home and
    Community-Based Services Copayment Equity Act of 2007 (S. 1107) would
    eliminate Medicare Part D co-payments for more than one million low-
    income Americans, including dual eligible residents of AL/RC facilities
    and other licensed facilities such as group homes for people with
    developmental disabilities, psychiatric health facilities, and mental
    health rehabilitation centers. Dual eligible beneficiaries receiving
    services in a home setting under HCBS waivers also would be relieved of
    Part D co-payments. This legislation is supported by a growing
    coalition of more than 35 national organizations representing a wide
    range of interests--consumers, health care and long-term care
    providers, geriatric care professionals, pharmacists, and state
    officials (see attached letter to Senator Smith from these
    organizations dated June 11, 2007). We ask that the House immediately
    introduce companion legislation.
        Currently, approximately 15% of the nearly one million Americans in
    assisted living residences are dually eligible for Medicaid and
    Medicare coverage. Under HCBS waivers, residents placed in AL/RC
    facilities must be eligible for placement in nursing homes. Like
    nursing home residents who rely on Medicaid, more than 120,000 dual
    eligible residents living in AL/RC facilities have very limited
    financial resources--often just a few dollars a month from a personal
    needs allowance. These residents, like those in nursing homes, often
    require multiple prescription medications--about 8-10 prescriptions--
    according to recent studies. So, in some instances, the amount of their
    combined Medicare Part D co-pays exceeds their monthly personal needs
    allowances.
        In addition, because their Part D co-pays are indexed for inflation
    while their limited resources grow less rapidly, if at all, there is an
    even greater burden placed on these individuals.
        On January 1, 2006, dual eligible beneficiaries who previously
    received medications under Medicaid programs were automatically
    enrolled in Medicare Part D drug plans. Under Part D, pharmacies and
    Part D Plans are not required to dispense medications if a beneficiary
    does not pay co-payments. Unless the law is changed, dual eligible
    residents of AL/RC facilities and others receiving services under
    Medicaid waivers who cannot afford these co-payments may be at risk for
    not receiving essential medications.
        Another reason we support the elimination of Medicare Part D co-
    payments for this population is to maintain a level playing field
    between institutional and community-based services under Medicaid. For
    many years, policymakers and the public have supported expanding
    options for people to receive long-term care services at home and in
    community-based settings under the Medicaid program. AHCA/NCAL supports
    the principle of Medicaid providing the appropriate services in the
    setting that best meets each individual's needs and preferences.
    According to an analysis of the Medicare Part D co-payment legislation,
    which was conducted for AHCA/NCAL by the Lewin Group, by next year, the
    number of dual eligible beneficiaries in home and community based
    settings that would be impacted by this legislation will be larger than
    the number of dual eligible beneficiaries living in nursing homes and
    other institutions.
        For a small investment in covering Medicare Part D co-pays,
    Congress would remove an impediment that could prevent some people from
    remaining at home or in an assisted living facility, thereby saving
    state and federal dollars as these care settings can be less expensive
    than the care provided in America's nursing homes. Still, the most
    important reason to pass this legislation is to help frail, elderly
    seniors afford much-needed medications.
        Thank you for this opportunity to bring this important issue to the
    attention of the Committee.
        For more information, please contact NCAL Senior Policy Director
    Karl Polzer
                                   __________
    June 11, 2007
    The Honorable Gordon H. Smith
    United States Senate
    Washington, DC 20510

    Dear Senator Smith,

        The organizations listed below strongly support legislation that
    would eliminate Medicare Part D co-payments for low-income residents of
    assisted living and residential care facilities and others receiving
    home and community-based services under Medicaid. We commend you and
    your co-sponsors for introducing The Home and Community Services
    Copayment Equity Act of 2007 (S. 1107) and urge passage of this
    legislation.
        Recognizing the vulnerability of very low-income people living in
    long term care facilities such as nursing homes, Congress exempted dual
    eligibles (people eligible for both Medicare and Medicaid) living in
    these facilities from any cost-sharing for Part D prescription drugs.
    Unfortunately, the original Part D legislation did not eliminate co-
    payments for dual eligible residents of assisted living and residential
    care, even though this population is usually ``nursing-home eligible''
    by definition and has similar needs, incomes and vulnerabilities. Like
    nursing home residents on Medicaid, the 121,000 dual eligibles in
    assisted living and residential care have very limited financial
    resources, often just a few dollars a month from a personal needs
    allowance. For many of these residents, the amount of their Part D co-
    payments exceeds their monthly personal needs allowances.
        Residents in nursing homes and assisted living and residential care
    use a similar number of prescriptions--approximately 8-10, according to
    recent studies. Even Part D co-payments of $1--$5.35 per prescription
    can present financial hardships for dually eligible assisted living
    residents, and, as we have heard from facilities across the country,
    could impede people from receiving needed medications.
        Passage of S. 1107 would eliminate Part D co-payments for about 1
    million dual eligible beneficiaries, including residents of assisted
    living and residential care as well as other licensed facilities such
    as group homes for people with mental retardation and developmental
    disabilities, psychiatric health facilities and mental health
    rehabilitation centers. Dual eligibles receiving services under home
    and community-based waivers in a home setting would also be relieved of
    Part D co-payments under the bill.
        We would like to thank you and your colleagues for introducing this
    legislation and look forward to working with you to ensure its passage.

    Letter to Senator Smith

    Page 2

                Sincerely,
                                            Alliance for Holistic Aging
                                                Alzheimer's Association
                               American Academy of Home Care Physicians
               American Association of Homes and Services for the Aging
                                            American Geriatrics Society
                                       American Health Care Association
                                 American Medical Directors Association
                    American Network of Community Options and Resources
                                   American Seniors Housing Association
                             American Society of Consultant Pharmacists
                                  Assisted Living Federation of America
                                                Benjamin Rose Institute
                                           Center for Medicare Advocacy
                                 Consumer Consortium on Assisted Living
                          Developmental Disabilities Nurses Association
                                                    Epilepsy Foundation
                                                           Families USA
                                       Long Term Care Pharmacy Alliance
                                                 Medicare Rights Center
                                National Adult Family Care Organization
                                    National Alliance on Mental Illness
         National Association of Boards of Examiners of Long Term Care
                                                         Administrators
                           National Association for Home Care & Hospice
                 National Association of Local Long Term Care Ombudsmen
           National Association of Professional Geriatric Care Managers
                                 National Association of Social Workers
              National Association of State Directors of Developmental
                                                  Disabilities Services
                       National Association of State Ombudsman Programs
                           National Association of State Units on Aging
                                    National Center for Assisted Living
                             National Community Pharmacists Association
                                    National Multiple Sclerosis Society
         NCCNHR: The National Consumer Voice for Quality Long-Term Care
                                           The Arc of the United States
                                                  United Cerebral Palsy
                                              United Jewish Communities
                      Washington State Long Term Care Ombudsman Program

                Statement of National Home Infusion Association
        The National Home Infusion Association (``NHIA'') is pleased to
    present this written statement for the record in connection with the
    Ways and Means Health Subcommittee's June 21, 2007 hearing on the
    Medicare prescription drug benefit.
        NHIA is a national membership association for clinicians, managers
    and organizations providing infusion therapy services to patients in
    the home and outpatient settings. Our members include independent local
    and regional home infusion pharmacies; national home infusion provider
    organizations; and hospital-based infusion organizations. Generally,
    infusion pharmacies can be defined as pharmacy-based, decentralized
    patient care facilities that provide care in alternate sites to
    patients with either acute or chronic conditions.
        It is now clear that beneficiaries who require infusion therapy and
    are capable of receiving this therapy in their homes are not being
    adequately served by Part D. 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. As
    explained below, Part D does not cover the infusion-related
    professional services, supplies and equipment necessary for the safe
    and effective provision of home infusion therapy. 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. It is noteworthy that private sector health plans
    typically cover home infusion therapy as a comprehensive medical
    benefit rather than a pharmacy benefit, as do some state Medicaid
    programs.
    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.
    Specific home infusion therapies provided include anti-infectives,
    chemotherapy, pain management, inotropic therapy, hydration therapy,
    immunotherapy, steroid therapy, tocolytic therapy and others. Medical
    conditions treated with home infusion therapy include:

          Infections of all kinds, including respiratory, urinary
    tract, soft-tissue, post-operative infections, and pneumonia;
          Cancer and cancer-related pain;
          AIDS-related conditions such as anemia, malnutrition, and
    severe pain;
          Congestive heart failure;
          Immune deficiencies;
          Multiple sclerosis;
          Hemophilia

        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 with separate payments 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.

    Home Infusion Therapy is not a Good Fit under Part D
        CMS's final Part D rule limited coverage of infusion therapy to the
    cost of the drugs alone and a retail-like dispensing fee. The
    regulation expressly disallowed coverage for the professional services,
    supplies, or equipment necessary to safely provide home infusion
    therapy, which 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 important 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 are not dual-
    eligibles or do not have supplemental insurance have little or no
    access to home infusion therapies under Medicare Part D. Since the non-
    covered home infusion supplies, equipment, and professional services
    constitute most of the costs associated with home infusion, and since
    most beneficiaries cannot afford to pay home infusion ancillary costs
    out-of-pocket, these Medicare beneficiaries are effectively denied
    access to home infusion. Many are being forced to seek treatment in
    hospitals and skilled nursing facilities at a significantly higher cost
    to Medicare and at much greater risk to the patients' health and their
    well being.
        In addition, Part D coverage limitations can pose a very real
    threat to health and safety. There were initial reports that some non-
    infusion pharmacies were sending 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. Fortunately, CMS was quick to recognize the
    serious safety concerns and took 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, 2006, the
    following issues have arisen and remain with respect to the coverage
    and provision of home infusion therapy under this benefit:

          As described above, 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.

        We should note for the Subcommittee that we are in regular
    communication with CMS officials on these issues and appreciate CMS'
    on-going efforts to address our concerns. However, in light of the
    over-arching structure of the Part D benefit, as well as its
    limitations described above, it is apparent that the coverage problems
    can only be resolved by a statutory change.
        For decades, the private sector has made effective use of home
    infusion therapy to deliver life-saving treatments to patients without
    the added cost and inconvenience of hospitalization. Medicare's
    ``coverage gap'' in this area actually increases costs to the Medicare
    program because patients are forced into more expensive treatment
    settings, such as hospitals or skilled nursing facilities, to receive
    their care. Since most beneficiaries cannot afford to pay home infusion
    ancillary costs out-of-pocket, the Medicare program can achieve the
    efficiencies, cost savings, and quality improvements employed in the
    private sector only if the requisite home infusion services, supplies,
    and equipment are covered under Part B.
        Why do we believe that home infusion services, supplies, and
    equipment should be covered under Part B? Part B is the most logical
    part of the Medicare program in which to place the non-drug components
    of the therapy and where national Medicare quality standards for the
    provision of this therapy can most easily be developed. As a result,
    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
    Part D administrative structure 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.
        Medicare's coverage gap also jeopardizes patient safety. Studies
    show that the application of stringent quality standards for home
    infusion therapy produces superior outcomes for patients. There is
    growing evidence that hospital stays significantly increase the
    possibility of serious infections. When beneficiaries receive infusion
    therapy within the home setting, they are far less likely to acquire
    infections. In addition, they are not inconvenienced by long distance
    travel to receive their treatments, and are able to recover from their
    illness within the comfort of their own homes.
    Proposed Solution
        On June 7, Representatives Eliot Engel and Kay Granger introduced
    the ``Medicare Home Infusion Therapy Coverage Act'' (H.R. 2567), which
    would provide comprehensive Medicare coverage of home infusion therapy.
    This legislation would continue to cover infusion drugs under Part D,
    but would cover home infusion therapy professional services, supplies
    and equipment under Medicare Part B. The bill also would provide CMS
    with the authority to do what is necessary to ensure that this benefit,
    involving two Parts of the Medicare program, is practical and workable
    for beneficiaries.
        Because complex intravenous therapies that require extensive
    clinical services, care coordination, equipment, and supplies should be
    administered in adherence to stringent quality standards of care, H.R.
    2567 would require the Secretary of the Department of Health and Human
    Services to develop appropriate quality standards to ensure the safe
    and effective provision of home infusion therapy.
        If enacted, this legislation would lower costs, produce better
    outcomes for beneficiaries, and implement rigorous quality standards.
    As long as Congress allows incomplete coverage of and access to home
    infusion therapy in Medicare, the program will not realize the
    potential efficiencies, cost-savings, and quality improvements
    possible.
        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.
        For further information, please contact Russell Bodoff, Executive
    Director of NHIA

     Statement of National Senior Citizens Law Center, Oakland, California
        The National Senior Citizens Law Center (NSCLC) is please to submit
    this written statement to the House Ways and Means Committee's
    Subcommittee on Health on the topic of protecting beneficiaries of
    Medicare Part D. These comments are submitted by the Oakland,
    California office of NSCLC, which has particular responsibility in the
    organization for Medicare Part D advocacy and litigation.
        NSCLC advocates nationally on behalf of the low-income elderly and
    persons with disabilities. We have been working with hundreds of legal
    services attorneys, State Health Insurance Assistance Programs (SHIP)
    counselors, and other lawyers and non-lawyer advocates for the elderly
    and disabled on Medicare Part D issues since the inception of the
    program. These contacts with advocates across the country have given us
    the opportunity to monitor closely the challenges that low income
    beneficiaries have faced in accessing benefits under Part D.
        Medicare Part D, after a year and a half of implementation, fails
    to deliver consistent, guaranteed access to medically necessary drugs
    for all beneficiaries. The most vulnerable members of the Medicare
    population--dual eligibles (those who receive both Medicare and
    Medicaid) and other recipients of the Low Income Subsidy (LIS)--are in
    great need of increased protection. In this testimony, NSCLC urges
    Congress to act in four critically important areas: (1) access to the
    LIS for those determined or deemed eligible; (2) procedural protections
    for LIS recipients; (3) procedures allowing Medicare beneficiaries to
    obtain medically necessary drugs through exceptions and appeals; and
    (4) oversight, monitoring and complaint resolution for individuals,
    especially dual eligibles, who have problems getting drugs or the LIS.
    I. System Design Flaws Limit Access to Low Income Subsidy Benefits
        With the Medicare Modernization Act of 2003, Congress intended that
    the poorest, most vulnerable enrollees would receive the maximum level
    of protection. To this end, Congress mandated that dual eligible
    beneficiaries should be automatically enrolled in private drug plans,
    to ensure a seamless transition from Medicaid to Medicare drug
    coverage. In addition, dual eligibles receive the LIS without needing
    to apply. The LIS was designed also to assist other low-income
    beneficiaries who could not afford the high out-of-pocket costs
    associated with Part D.
        For dual eligibles and others automatically entitled to the LIS,
    the process has not been seamless. Systemic delays and errors in the
    Medicare Part D system mean that the proper LIS subsidy often is not
    available at the pharmacy counter. According to the recent GAO report,
    the data management system established by CMS takes a minimum of five
    weeks to make LIS information accessible at the pharmacy for new dual
    eligibles. CMS admits that the process may result in delays of more
    than two months. In addition, advocates report that beneficiaries often
    experience a variety of glitches that cause them to get the wrong
    subsidy level or to lose the LIS entirely. These delays and errors are
    not mere inconveniences. Lack of subsidy can lead to full-blown medical
    crises for LIS beneficiaries who have no other means of accessing
    necessary medications.
        Delays associated with the LIS also greatly undermine another
    beneficiary protection Congress created in the MMA: the continuous
    enrollment period that allows dual eligibles to change prescription
    drug plans at any time, effective the first day of the following
    month.\1\ This important procedural protection means that if a dual
    eligible needs a drug not covered by the current plan's formulary, he
    or she can switch to a different plan that does cover the drug for the
    next month. Yet with the current flawed CMS system, requests to change
    plans frequently do not take effect in a timely manner, and LIS
    information may be further delayed or lost. When dual eligibles and
    other LIS individuals are not promptly transferred along with their
    subsidy, they cannot receive the full intended benefit of a continuous
    enrollment period.
    ---------------------------------------------------------------------------
        \1\ CMS guidance now extends this enrollment period to all LIS
    recipients.
    ---------------------------------------------------------------------------
        If Medicare Part D is to provide full protection for LIS
    beneficiaries, an infrastructure for transferring data in real time is
    indispensable. The many Part D actors include private drug plans, the
    States, the SSA, pharmacies, and a multitude of government contractors.
    Without strong federal leadership, the current complex system will
    continue to breed widespread inefficiency, delays, confusion, and
    errors for beneficiaries.
        To this end, Congress should establish a deadline for CMS
    conversion to a real-time data transfer system. With a single, central
    data system that all relevant parties could access in real time, LIS
    errors would be reduced and beneficiaries would receive fewer confusing
    mixed messages. Pharmacists would receive reliable information about
    their customers' plan enrollment and subsidy status.
        Most immediately, dual eligibles and other low-income beneficiaries
    desperately need an effective safety net for the times when the current
    system fails to deliver accurate LIS information. The current pharmacy-
    level safety net for dual eligibles, the Point of Sale (POS) mechanism,
    covers only one type of problem encountered by dual eligibles (delayed
    auto-enrollment).\2\ Dual eligibles and others who encounter problems
    with the LIS or with plan membership are not permitted to access the
    POS mechanism for a temporary supply of medication.
    ---------------------------------------------------------------------------
        \2\ The POS mechanism also suffers from other major flaws. For
    instance, pharmacists who contract with Part D plans are not required
    to use it. As one advocate explains, ``I frequently hear from clients
    that pharmacists either don't understand POS billing or simply don't
    want to spend the time going through the steps to bill POS.'' Contact
    NSCLC for more information about flaws with the POS and how to fix
    them.
    ---------------------------------------------------------------------------
        Congress should requie CMS to expand the scope of this safety net
    to cover all LIS problems.
    II. CMS Drops LIS Recipients Without Adequate Due Process
        In late 2006, more than 630,000 low-income Medicare beneficiaries--
    eight percent of all LIS recipients--were dropped off of the LIS for
    2007 because of a change in their Medicaid status. These individuals
    lost their subsidy effective January 1, 2007, unless they took some
    further action. Appropriately, given the administration's abandonment
    of this group's needs, this population was known as the ``un-
    redeemed.''
        CMS failed to take appropriate procedural steps to ensure that this
    vulnerable population would continue to receive access to necessary
    medications. CMS did not review ``un-redeemed'' cases to determine
    whether their income and resources were low enough to remain eligible
    for the LIS or whether they could qualify for the LIS on some other
    basis. The agency simply terminated the benefit outright. While CMS
    asserted that the agency sent a notice to these individuals in
    September, many beneficiaries report never receiving it. Those who did
    receive the notice were told that they must apply with SSA to re-
    qualify.
        ``Un-redeemed'' beneficiaries had no opportunity to appeal. As a
    result, individuals who were victims of a CMS mistake (i.e. who were in
    fact still receiving Medicaid) found themselves bounced back from drug
    plans to CMS to SSA and to State agencies. No governmental entity took
    ownership of this problem. To make matters more confusing, SSA
    implemented an entirely separate process for ``redetermining'' LIS
    eligibility for those who qualified for the LIS through an application
    with SSA.
    Congress should require CMS to:

          Establish sufficient procedural protections to ensure
    that no beneficiary drops off the LIS rolls because of loss of
    automatic eligibility without first being screened for all possible
    categories of LIS eligibility.
          Institute appropriate notice and appeal rights.
          Streamline and standardize CMS and SSA processes for
    reviewing LIS eligibility in order to minimize confusion.

        III. The Exceptions and Appeals Process Needs Overhaul.
        The MMA gives all Medicare Part D beneficiaries a statutory right
    to appeal a drug plan's decision to deny coverage of a prescription
    drug. In practice, however, the procedures authorized by CMS are so
    complicated and contain so many major gaps that beneficiaries' ability
    to exercise that right is severely constrained.
        Typically, a beneficiary learns that his or her prescription will
    not be covered by the plan at the pharmacy. The pharmacist receives a
    computer message of non-coverage. The beneficiary is then faced with
    the choice of paying full price for the drug (an impossibility for most
    dual eligibles and other LIS recipients) or going without needed
    medication.
        Beneficiaries are given no specific information or assistance in
    requesting an exception to the formulary or otherwise appealing the
    denial of coverage. CMS does not even mandate that pharmacists share
    the specific reasons for the denial with the beneficiary, although
    specific denial codes are generally available. The beneficiary usually
    receives no specific notice of appeal rights. Instead, a generic notice
    is posted somewhere on a pharmacy wall, without plan-specific contact
    information. Most importantly, the beneficiary has no right to an
    emergency supply of drugs, even in circumstances of extreme
    hardship.\3\
    ---------------------------------------------------------------------------
        \3\ Plans are required to have transition policies for medications
    on which a beneficiary is already stabilized, but beneficiaries to not
    enjoy these protections for new prescriptions.
    ---------------------------------------------------------------------------
        If a beneficiary manages to find information about the appeals
    procedure, he or she will learn that the initial denial at the pharmacy
    cannot be immediately appealed; instead, the beneficiary must take the
    additional step of asking for a ``coverage determination,'' a request
    that often must be supported by a doctor's statement. Each plan may
    have a different process for handling coverage determinations.
        Once a beneficiary obtains a coverage determination, appeal rights
    finally begin. There are five different levels of appeals, beginning
    with reconsideration by the plan itself and ending with federal court
    review. Those without skilled advocates or patient doctors stand little
    or no chance of navigating this labyrinth of appeals. Moreover,
    advocates and beneficiaries report that plans often fail to adhere to
    the required timeframes; CMS does not appear to be monitoring this
    activity.
        Congress could require simplification and streamlining of the
    appeals process. NSCLC recommends the follow steps, which could be
    accomplished by CMS regulation, guidance and enforcement.

          Require plans to treat the denial at the pharmacy as a
    coverage determination, triggering notice requirements and appeal
    rights.
          Provide particularized notices stating the reason for
    denial and explaining procedures for contesting a determination.
          Require provision of temporary emergency drug supplies.
          Establish uniform procedures and criteria for all Part D
    drug plans.

        Another serious impediment to access to necessary and often life
    saving drugs, is the statutory limit on Part D coverage of off-label
    uses. Currently, the MMA permits Part D coverage of off-label uses only
    if those uses appear in one of three commercially prepared compendia,
    leading to significantly more restrictive coverage than is provided by
    many non-Medicare insurance plans, which cover off-label uses if
    support by peer-reviewed literature, and by Medicaid, which gives
    states appropriate flexibility in off-label coverage.
        NSCLC recommends that Congress amend the MMA to provide Part D
    coverage of recognized off-label uses of medication when supported by a
    showing of medical necessary.
    IV. Oversight, Monitoring and Complaint Resolution Are Inadequate.
        The current CMS system for tracking and resolving complaints
    involving Medicare Part D is faulty. CMS relies too much on the private
    Part D plans to receive and respond to beneficiary complaints. This
    failure has two serious consequences: (1) dual eligibles and others do
    not get the help they need solving problems; and (2) CMS is not able
    efficiently to identify systemic problems and come up with effective,
    system-wide solutions.
        When problems arise like those involving the Low Income Subsidy
    (described in Section I above), beneficiaries are not able to get the
    help that they need to resolve the problem, but are often bounced
    between plans and CMS. If a beneficiary contacts 1-800-MEDICARE, the
    customer service representative tells him or her to first contact the
    Part D plans, even though plan representatives are often unable or
    unwilling to untangle LIS data errors. Beneficiaries end up being sent
    from plan to agency and back again without resolution. As one
    experienced advocate told us, ``My clients are not able to resolve
    these types of problems [with the Low Income Subsidy] on their own and
    they do not know who to contact for assistance. By the time they reach
    me, they are confused and exhausted by their fruitless efforts.''
        CMS has no way to track such frustrating experiences. CMS directs
    1-800-MEDICARE customer services representatives (CSRs) not to keep a
    detailed record of the problems of callers who are referred to plans.
    CSRs have no capability to enter complaints about the Medicare Part D
    system itself (e.g., that CMS has not promptly transferred LIS
    information) into the CMS complaint tracking system. When callers do
    manage to file complaints successfully, the overwhelming majority of
    those are, once again, forwarded on to plans for resolution. CMS does
    little to determine the effectiveness of plans' complaint resolution.
    For all of these reasons, CMS' current monitoring system fails to
    capture the beneficiary experience. Relying only on aggregate complaint
    data and limited polling, CMS officials are often unaware of systemic
    problems faced by the most vulnerable Part D participants.
        Increased Congressional oversight of CMS can help solve this
    problem.
    Congress should:

          Require CMS to establish a special ombudsman or other
    trouble-shooting office to get LIS and enrollment problems fixed
    quickly;
          Increase funding for State Health Insurance Assistance
    Programs (SHIPs), and community based organizations which provide the
    one-on-one counseling that is necessary in light of the complexities of
    Medicare Part D; and
          Mandate continued, in-depth investigation of problems
    faced by dual eligibles and other low-income Medicare Part D
    beneficiaries.

        Thank you for the opportunity to submit this testimony. The
    National Senior Citizens Law Center would be pleased to work with the
    Congress to address the problems we have identified; please feel free
    to contact any of us.

    Anna Rich, Liman Fellow
    Katharine Hsiao, Co-Directing Attorney
    Georgia Burke, Co-Directing Attorney
    Kevin Prindiville, Staff Attorney

            Statement of Alliance of Claims Assistance Professionals
        Medicare Part D needs to streamline procedures for snowbirds. My
    clients are experiencing great difficulty because of address change
    forms and involuntary disenrollment due to relocation. Plan D members
    receive a flurry of forms they do not understand, and anxiety levels
    are high. If there were one government Medicare D plan, this would not
    be a problem. Privatization is costing more than it is worth. In Ohio,
    59 private plans all have customer service with extended hours. How
    much is this costing taxpayers?
        Recently, I called 1-800-medicare for a client under 65 who needs a
    D plan. The ``benefit specialist'' immediately launched into a hard
    sell on the Humana Advantage plan with pdp. She knew all the benefits
    of this plan down to the fine print. I reached her at a government
    agency--are taxpayers now paying to advertise products of a private
    insurance company?
                                                         Kathleen Hogue
        MEDIFORM Inc.
        Lisa,
        What I have found is that patients were taken advantage of in that
    they thought they were enrolling for Part D and somebody signed them up
    for an Advantage plan. When they realized that their Physicians would
    not take that plan, they have a very difficult time re-enrolling in
    traditional Medicare.
                                                                  Robin
        I am in complete agreement.
        What I heard from my congressman is that choices are good and
    probably the next generation of seniors will want the
    choices.............
        In Connecticut we have 54 plans available this year. I am for
    choices, but I would not want to have that many choices. They are
    confusing to seniors and did not add any value to the program.
        From the first year to the second year the overall quality of
    coverage decreased. If this trend continues we will be dwindling down
    to nothing.
                                                                Katalin