[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
HEARING ON BENEFICIARY PROTECTIONS
IN MEDICARE PART D
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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
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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
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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.
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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:]
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[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.
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\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.
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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.
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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.
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\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.
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\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.
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\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
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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.
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\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
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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.
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\1\ Lipitor 10mg; Altace 10 mg; Celebrex 200 mg; nifedipine ER 30
mg; Zoloft 100 mg.
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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.
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\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.
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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\
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\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.
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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\
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\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.
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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.
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\1\ CMS guidance now extends this enrollment period to all LIS
recipients.
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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.
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\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.
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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\
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\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.
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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