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



 
                   HEARING ON BENEFICIARY PROTECTIONS

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


                                HEARING

                               before the

                         SUBCOMMITTEE ON HEALTH

                                 of the

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

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 21, 2007

                               __________

                           Serial No. 110-50

                               __________

         Printed for the use of the Committee on Ways and Means



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                      COMMITTEE ON WAYS AND MEANS

                 CHARLES B. RANGEL, New York, Chairman

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

             Janice Mays, Chief Counsel and Staff Director

                  Brett Loper, Minority Staff Director

                                 ______

                         SUBCOMMITTEE ON HEALTH

                FORTNEY PETE STARK, California, Chairman

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

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.

                            C O N T E N T S

                               Page______

                               WITNESSES

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

                                 ______

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

                       SUBMISSIONS FOR THE RECORD

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


         HEARING ON BENEFICIARY PROTECTIONS IN MEDICARE PART D

                              ----------                              


                        THURSDAY, JUNE 21, 2007

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

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

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

              SUBCOMMITTEE ON HEALTHFOR IMMEDIATE RELEASE

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

Stark Announces a Hearing on Beneficiary Protections in Medicare Part D

    House Ways and Means Health Subcommittee Chairman Pete Stark (D-CA) 
announced today that the Subcommittee on Health will hold a hearing on 
protecting beneficiaries in Medicare Part D plans. The hearing will 
take place at 2 p.m. on Thursday, June 21, 2007, in Room 1100, 
Longworth House Office Building.
      
    In view of the limited time available to hear witnesses, oral 
testimony at this hearing will be from the invited witness only. 
However, any individual or organization not scheduled for an oral 
appearance may submit a written statement for consideration by the 
Committee and for inclusion in the printed record of the hearing.
      

BACKGROUND:

      
    The Medicare Modernization Act of 2003 (P.L. 108-173) created a new 
Medicare Part D voluntary prescription drug program for beneficiaries. 
Since January 2006, beneficiaries have had the opportunity to enroll in 
private-sector prescription drug plans. As of March 2007, 16.9 million 
beneficiaries were enrolled in stand-alone prescription drug plans 
(PDPs) and another 7.1 million were enrolled in Medicare Advantage 
plans offering prescription drugs (MA-PDs). Millions more Medicare 
beneficiaries receive drug coverage through other sources like the 
Department of Veterans Affairs or a former employer.
      
    In nearly every state, beneficiaries must choose among more than 50 
different drug plan options offered by eight to 40 different plan 
sponsors. Each plan can offer a unique benefit structure as long as it 
is actuarially equivalent to the standard benefit. This forces 
beneficiaries to compare widely varying premium, cost-sharing, 
formulary, and utilization management designs. Beneficiary confusion 
about the number and type of plan offerings has led to calls for 
prescription drug plan standardization, similar to the Medigap market, 
or for the creation of a drug program administered by Medicare that 
competes with private sector plans.
      
    Implementation of the new Part D drug program was fraught with 
problems. Beneficiaries had trouble navigating the multitude of drug 
plan choices, and even after signing up many still struggled to get 
their drugs at the pharmacy counter. While many of those early problems 
have been fixed, Congress has an obligation to make sure Part D runs 
smoothly and beneficiaries are adequately protected. Advocates for 
Medicare beneficiaries have expressed ongoing concerns with enrollment 
periods and practices, formulary requirements and exceptions, appeals 
and grievance procedures, marketing abuses and beneficiary education.
      
    In announcing this hearing, Chairman Stark said: ``Part D has been 
up and running for a year and a half, and Congress has yet to look at 
any changes necessary to protect beneficiaries in this new program. 
It's time to shine the light on Part D and see if there are some simple 
things we can do to improve the program for beneficiaries and 
taxpayers.''
      

FOCUS OF THE HEARING:

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

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

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

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

    [GRAPHIC] [TIFF OMITTED] 47757A.003
    
    [GRAPHIC] [TIFF OMITTED] 47757A.004
    
    [GRAPHIC] [TIFF OMITTED] 47757A.005
    
    [GRAPHIC] [TIFF OMITTED] 47757A.006
    
    Chairman STARK. If nobody else cares to enlighten us at 
this point, we will turn to our first panel. It is a pleasure 
to have the Acting CMS Administrator, Leslie Norwalk, back with 
us today; and we have the privilege of being enlightened by Ms. 
Kathleen King from the Government Accountability Office, which 
I assume you know as GAO.
    Thank you both for joining us; and can you tell us, 
starting with Ms. Norwalk, how we might improve Part D and make 
it work better for our beneficiaries?

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

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

                                 

    Chairman STARK. Ms. King.

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

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

                                 

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

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

RPTS STRICKLAND

DCMN MAGMER
[3:25 p.m.]

    Chairman STARK. I thank our witnesses for their patience, 
and I would like to see if Mr. Doggett would like to inquire.
    Mr. DOGGETT. Yes, Mr. Chairman.
    Thank you, for your testimony, Ms. King. Thank you for this 
particular report and for all of the important work that the 
GAO does to attempt to assure a little bit of accountability 
for the taxpayers' dollars.
    I found your report to be very alarming. As I understand 
your findings, the Bush Administration paid out $100 million to 
insurance companies and other sponsors of these plans and does 
not know whether they got anything for it.
    Ms. KING. That is correct.
    Mr. DOGGETT. Yes. So, often here, usually at campaign time, 
I hear about waste, fraud and abuse of the government; and yet 
the ability of this Administration to throw money at problems 
as long as their friends catch it never ceases to appall me.
    With reference to this 100 million which was your estimate 
of the amount of money that CMS paid out for 2006, CMS does not 
dispute your amount of $100 million paid out.
    Ms. KING. That is correct.
    Mr. DOGGETT. CMS could not give you any information to 
indicate that they got anything for the $100 million.
    Ms. KING. We recommended to CMS that they start tracking 
their beneficiaries who were in retroactive coverage periods 
and start tracking the dollars paid out during that time, and 
they agreed to do that going forward.
    Mr. DOGGETT. Going forward. So, forget about the first $100 
million that may have been wasted, but they will at least have 
a modicum of accountability for the future.
    As to the past $100 million that they shelled out, that 
$100 million was alleged to assure prescription drug coverage 
for some of the poorest people in this country. If I understand 
correctly, they did not know they were entitled to coverage at 
the time the $100 million went out. The beneficiaries, they had 
not been notified.
    Ms. KING. That is a function of two things. One is the 
length of time of the enrollment processing period, which is 
about 5 weeks; and then the other part of it is the decision to 
make coverage retroactive to the first date of Medicaid 
eligibility, which is 3 months--generally, 3 months prior to 
their Medicaid application.
    Mr. DOGGETT. Well, did you find out after paying out the 
$100 million--surely the Bush Administration notified these 
poor people to save their receipts, and if they managed to buy 
their prescriptions instead of buying their groceries to save 
that receipt and turn in so they could gets reimbursed. Did 
that happen?
    Ms. KING. In March of 2007 CMS did send out a letter to 
beneficiaries----
    Mr. DOGGETT. March of 2007?
    Ms. KING. Yes.
    Mr. DOGGETT. Was that about the future or did that tell 
them about a year after they may have incurred that receipt 
that they needed to keep their receipts and turn them in and 
get reimbursed?
    Ms. KING. I believe that March 2007 was the first time.
    Mr. DOGGETT. Again, the poor people who made these payments 
were not told that they had any rights to get reimbursed out of 
the $100 million the Bush Administration paid out.
    How about the community pharmacists? Because I know many of 
these poor people go to a community pharmacy to get their 
benefits. This was occurring at the same time that there were 
multiple complaints from community pharmacists that they were 
not being properly paid by the same companies that got the $100 
million, wasn't it?
    Ms. KING. I am afraid I can't answer that question because 
the community pharmacy thing was not part of the scope of our 
study.
    Mr. DOGGETT. I understand. Well, thank you for the study 
you did. It is an amazing finding. But--as part of the overall 
problem of throwing money in the wrong direction and not 
according the protection that people have.
    Ms. NORWALK. May I have an opportunity to respond, Mr. 
Doggett?
    Mr. DOGGETT. I have a quite a few questions for you as 
well. If my time permits.
    As you know, we have had requests outstanding since the 
last time you were here to determine whether CMS had any 
specific objections to the extra help legislation that I have 
introduced. We still don't have an answer. Do you have it 
today?
    Ms. NORWALK. It depends on the specific piece of that. I 
know that we are working with the IRS and the Social Security 
Administration to get back to those specifics.
    Mr. DOGGETT. Each specific piece that I have been asking 
for responses, responsive responses for months that I have been 
unable to get from you. Do you have those answers?
    Ms. NORWALK. I don't have them with me, but I will be sure 
to get them.
    Mr. DOGGETT. Do you have any updated information on how 
many people who are eligible for extra help have not received 
it?
    Ms. NORWALK. We anticipate in terms of specifics just over 
3 million.
    Mr. DOGGETT. You don't dispute the estimate that the folks 
at GAO made of about $100 million paid out?
    Ms. NORWALK. I actually would like to go through a little 
more detail----
    Mr. DOGGETT. I would like to get answers to my questions 
first.
    Ms. NORWALK. I do think the $100 million is accurate in 
terms of fees paid to plans.
    Mr. DOGGETT. Did you track to see what, if any, benefits 
were paid out of that $100 million?
    Ms. NORWALK. It is part of the process that we will be 
doing with enrollment and premium reconciliation for 2006 that 
is ongoing currently. So, we will be tracking that. That is 
correct, yes.
    Mr. DOGGETT. So, when do you expect to be able to tell us 
what we got for the $100 million payment?
    Ms. NORWALK. There are three different reconciliation 
processes ongoing. We should have them completed by the fall.
    Mr. DOGGETT. You will be able to tell us then precisely by 
plan out of that $100 million you paid out precisely how much 
in benefits they paid out?
    Ms. NORWALK. As long as we can figure out the time in which 
the retroactive nature occurs. Because, as Ms. King pointed 
out, you enroll in the benefit in August, but you are 
retroactive. As long as we can figure out from the State 
perspective--I am not sure our systems or the plan systems 
allow us to do that. But if they do, we would be able to have 
some basic information. In terms of the specifics, I am not 
sure.
    But I will point out that we have spent a lot of time--and 
I would like to correct Ms. King. I actually have information 
we gave to beneficiaries in particular to our plan partners and 
the SHIPs, the State Health Insurance Programs, that 
specifically state please save your receipts. We did this in 
December, 2005; we reissued it in 2006; and we continue to do 
it. We do think it is important.
    I am happy to report that the States and their Medicaid 
forms also say save your receipts, so we do encourage that----
    Mr. DOGGETT. You expect that there will be some payments 
that were made out of that $100 million?
    Ms. NORWALK. Oh, absolutely. And----
    Mr. DOGGETT. When it is that you think you will have that 
by plan?
    Ms. NORWALK. It depends on our enrollment processes and our 
reconciliation. I am hopeful that it will be later this fall. 
But it really depends on the computer processes. So, as long as 
they go well.
    Mr. DOGGETT. Do you expect that information will show that 
most of that $100 million was paid out in benefits or kept by 
the insurance companies?
    Ms. NORWALK. You will recall those are premium payments. In 
terms of specifics, I have no idea how much the beneficiaries 
will have saved their receipts. It is similar to Medicaid 
because in the Medicaid program with retroactive enrollment you 
save your receipts and submit them. I suspect it would be 
similar to what you see on the Medicaid side.
    Mr. DOGGETT. Which would be about what?
    Ms. NORWALK. I don't know, but I will see if I can find out 
for you.
    Mr. DOGGETT. Thank you very much.
    Thank you, Mr. Chairman.
    Chairman STARK. Mr. Johnson would you like to inquire.
    Mr. JOHNSON. Thank you, Mr. Chairman.
    Ms. Norwalk, isn't it true that Medicare and the handbook 
which CMS annually sends to every Medicare beneficiary contains 
several pages of information specifically addressing 
beneficiaries?
    Ms. NORWALK. Of course.
    Mr. JOHNSON. Doesn't it also include information on how to 
file an appeal and phone numbers of who to call to file a 
complaint?
    Ms. NORWALK. It does.
    Mr. JOHNSON. So, what other steps do you take to notify 
beneficiaries to make sure they understand what their rights 
are?
    Ms. NORWALK. I think one of the most important things is 
what happens at the pharmacy counter, so beneficiaries have 
this information at their home on a regular basis. I don't 
know, some may look at it--their Medicare handbook may be well-
worn and others may simply collect dust. I am not sure. But it 
is still important when you go to the pharmacy that you would 
have information. So, we have required the plans to tell the 
pharmacies to hand this out to beneficiaries or at least make 
available the right so if a beneficiary is denied a 
prescription at the counter he or she will know how to get an 
appeal.
    We also have lots of information that we put on the--both 
on our Web site and give to our partners so that they can help 
beneficiaries, as often they do, with an appeal. So, we have 
very specific information as to all the steps that they take.
    In the Evidence of Coverage, which is the brochure that the 
plan sends to each beneficiary, they are required to have also 
the very specific steps at each plan that they take that are 
individual to that plan, the numbers that they call for the 
plan and likewise.
    One more thing, if I might add, which I did not get to. In 
2007, we do collect from the prescription drug plans their 
appeal rates within the plan. So, we will have some information 
around first quarter internal plan appeals in fairly short 
order. I think those plan numbers have come in, and we are 
taking a look and scrubbing them and making sure that they are 
comparing apples-to-apples.
    Mr. JOHNSON. Well, I understand that more than half of the 
Part D enrollees renewed their drug coverage when making their 
2007 plan choice. Can you talk about some of the beneficiary 
surveys that CMS conducted showing that seniors might be 
smarter than some groups give them credit for?
    Ms. NORWALK. Medicare beneficiaries are incredibly smart, 
and I know that for a number of reasons. The first way I know 
is, from the beginning of the benefit, the amount of generic 
prescriptions that are currently prescribed for Medicare 
beneficiaries has risen every single quarter, depending on the 
plan type. Almost 62, 63 percent, in fact, Medicare Advantage 
plans 68 percent. They are very smart shoppers.
    Likewise, we know that they use our comparison tools and 
work with the partners to make sure that they have been 
enrolled in the right plan, and the surveys that we have done, 
not only--not just CMS but independent surveys, including the 
Kaiser Family Foundation--do focus on how happy beneficiaries 
are with their plan coverage and what steps they have taken to 
enroll to be sure they have chosen the right plan. We would 
like everyone to be 100 percent happy, but for the second year 
of a program, 80 percent approval ratings, we are very pleased. 
Thank you.
    Mr. JOHNSON. I think seniors are saving money, and more 
drugs are available for them, and they cost a lot less than 
what they thought.
    Ms. NORWALK. Well, we are pleased both with the cost 
figures as well as the satisfaction figures; and we anticipate 
that they probably are related, that they are paying less than 
they initially anticipated that they would be paying.
    Mr. JOHNSON. They are. Thank you very much.
    Thank you, Mr. Chairman.
    Chairman STARK. Just out of curiosity, before I recognize 
Mr. Thompson, do we know of the 26 million enrollees--whatever 
it is.
    Ms. NORWALK. Twenty-four, I think.
    Chairman STARK. Twenty-four million. Do we know how many of 
those people out of the 24 million did not file any claims at 
all?
    Ms. NORWALK. I don't know. I suspect that is something that 
we could figure out when we go through the reconciliation 
process for 2006 as we determine----
    Chairman STARK. Somebody is nodding their head behind you. 
Do you know? Do you have a guess?
    Ms. NORWALK. We will know.
    Chairman STARK. Half?
    Ms. NORWALK. I would be very surprised if it is anywhere 
close to half. I suspect it is a much smaller percentage.
    Medicare beneficiaries typically take a fairly large number 
of prescriptions. We should have some idea once we go through 
this reconciliation process in terms of how we would pay the 
reinsurance for last year. So, we will know significantly more 
once that process finishes in the fall.
    Chairman STARK. I am not talking about appeals.
    Ms. NORWALK. No, no, I am not talking about appeals either.
    Chairman STARK. Might just have the insurance and not be 
sick enough to need it.
    Ms. NORWALK. I am not talking about appeals.
    One of the things we do from a reconciliation basis in 
order for us to pay reinsurance for the catastrophic coverage 
where we pay plans 80 percent of that cost, we will have 
significantly more information as we go through that, but it is 
a process that we are currently undertaking with the plans once 
we finish a few other computer runs.
    Chairman STARK. I apologize for intruding on your time.
    Mr. Thompson, if you would like to inquire.
    Mr. THOMPSON. It was on my time?
    Thank you, Mr. Chairman.
    Ms. Norwalk, does CMS plan to increase the level of funding 
provided to the SHIPs?
    Ms. NORWALK. We did increase it this year 5 percent.
    Mr. THOMPSON. Giving them an additional 5 percent?
    Ms. Norwalk, you obviously believe they are doing a good 
job.
    Ms. NORWALK. I think they are wonderful partners. I am 
grateful for their help.
    Mr. THOMPSON. Is 5 percent going to be enough?
    Ms. NORWALK. I am sure that all of us could use more money. 
The more money we have the better----
    Mr. THOMPSON. In your professional opinion, is 5 percent 
going to be enough for them to do the counseling that they 
need?
    Ms. NORWALK. I do think it is sufficient. I am certainly 
glad that we could give them an increase in their spending.
    Mr. THOMPSON. If you felt they needed more, would CMS 
support increased appropriation for SHIP outreach?
    Ms. NORWALK. I would not complain.
    Mr. THOMPSON. I want to go back to something that the 
Chairman started his questioning with earlier today when he was 
talking about the intermediate sanctions and asked you about 
specific numbers. Are you guys taking actions against other 
plans if problems don't rise to the level of intermediate 
sanctions?
    Ms. NORWALK. Absolutely.
    Mr. THOMPSON. What are they? You talk about compliance 
actions.
    Ms. NORWALK. Right, corrective action plans. If we find a 
particular issue with a plan through any number of mechanisms, 
particularly if it is a systemic issue, we will ask the plan to 
tell us how they will correct that. If we have issues that 
continue over time, then the level of sanction may continue to 
something more egregious. Or if the issue is more egregious, 
then they might have something beyond a corrective action plan 
like a civil monetary penalty.
    Mr. THOMPSON. Who determines what is egregious? The law 
does not talk about compliance actions, as I recall.
    Ms. NORWALK. I am not sure that the statute is very 
specific about that. But we have everything from issues 
relating to--if it is a fraud issue, what is the beneficiary 
harm? How many people are impacted? There are a number of 
different things that we consider.
    The statute does--when looking at civil monetary penalties, 
the statute does more globally, not specific to Part D but 
globally with Medicare, tell what are mitigating factors? What 
are aggravating factors and the like?
    I think, more generally, when we look at enforcement we can 
take a look at those sorts of things to consider what is the 
appropriate issue, how much is the beneficiary harmed, and how 
easy is it to solve? You know it when you see it, if you will.
    Mr. THOMPSON. Is that available to the Committee so we kind 
of get an idea of the problems that you are having and making 
that----
    Ms. NORWALK. One of the things that I mentioned to the 
Chairman is that we do plan to make the corrective actions that 
we have put into place public. I think I would like to do it in 
a way that the public can understand what it means. There is a 
lot of jargon that we use, so we will need to go back and make 
sure that we can put out summary information that is useful to 
the Committee. If you would like to see things behind that, I 
am sure we can share that with you as well.
    Mr. THOMPSON. When will that be, when we get that?
    Ms. NORWALK. I am hopeful that we can do it in the next few 
weeks. In short order.
    Mr. THOMPSON. Of the 600,000 beneficiaries that no longer 
qualify for the automatic enrollment in '07, how many much 
those folks are now enrolled in Part D?
    Ms. NORWALK. I am not sure I have--400,000 are back in. So, 
two-thirds.
    Mr. THOMPSON. So, 400,000 are enrolled?
    Ms. NORWALK. Have requalified for LIS, I will confirm that 
number. I want to be sure that is right.
    Mr. THOMPSON. What you are doing to contact those remaining 
unenrolled?
    Ms. NORWALK. There are two issues, I think. There are a 
number of different populations that had issues with the year 
change. Partly some of them may have lost their dual-eligible 
status, so reaching out to them to see if they qualify for the 
LIS status--I think that is the group you are speaking of--some 
of them may not qualify for LIS.
    Mr. THOMPSON. The LIS folks can enroll at any time.
    Ms. NORWALK. Correct.
    Mr. THOMPSON. Are you doing some sort of outreach to them?
    Ms. NORWALK. Yes, we did specific outreach. Everything from 
using specific colored letters so if they took it to a plan--if 
they took to a partner, the partner would know how to help them 
and the like and so on and so forth. Social Security sent them 
an extra application with a postage-paid envelope. We worked 
with the State Medicaid programs giving them a list of who 
these individuals are, so on and so forth.
    Mr. THOMPSON. Can we get an idea of how well we are doing 
enrolling those guys?
    Ms. NORWALK. That should be fairly easy for me to check, so 
I could get back to you in a few days.
    Mr. THOMPSON. Thank you.
    I yield back.
    Chairman STARK. Mr. Pomeroy, would you like to inquire?
    Mr. POMEROY. Thank you, Mr. Chairman.
    Ms. Norwalk, you testified almost a month to the day, May 
22nd, on Medicare Advantage private fee-for-service plans; and 
at that time there were a number of questions addressed to you 
which you did not have information with you. We sent you a 
letter dated June 5th and have been informed that there is 
still some time required for us to get the information from 
CMS. I would just alert you to information that I would like, 
and that is the FTEs that CMS has added for purposes of 
reviewing these private fee-for-service plans.
    Ms. NORWALK. I can tell you I don't think there have been 
any additional added. I suspect that we have moved around 
resources, and that might be a harder thing to determine.
    So, typically, what we will do when we go through a 
process, including whether it is private fee-for-service or any 
other increase in Medicare Advantage plans, we will often work 
with our regional offices as well as our central office. So, 
when someone is needing to do plan review we might move the 
resources around. But I don't know of any additional people 
that were hired specifically for this purpose.
    Mr. POMEROY. Earlier you indicated that you did not think 
the States should have a regulatory role beyond the role of 
agent licensure and solvency evaluation of the companies.
    Ms. NORWALK. Correct.
    Mr. POMEROY. But now you are telling us that ought to be a 
CMS function, this regulatory role; and now you are telling us 
that, by the way, we have hired no people to do it.
    Ms. NORWALK. I think we can do it with the resources that 
we have.
    Mr. POMEROY. When I was the insurance commissioner just for 
the State of North Dakota, I had 40 people involved in consumer 
protection. Obviously, not all of them dedicated to the senior 
market, although some of them were. How many personnel do you 
have devoted to making certain that the consumer safeguards are 
met in the State of North Dakota?
    Ms. NORWALK. I can't answer specifically for North Dakota, 
but there are a number of things that we do separate and apart 
from FTEs. One of the things we have done recently is credit 
with a group of three different companies called medics, and 
these medics will specifically look at both the prescription 
drug plans as well as the Medicare Advantage Plans going 
forward to look at waste, fraud and abuse and so forth. So, we 
have funded----
    Mr. POMEROY. Waste, fraud and abuse? I don't understand. 
How would waste, fraud and abuse be an issue on the insurance 
sale?
    Ms. NORWALK. It may well be. Some of the issues, as I am 
sure you are aware, relate to brokers who have forged 
signatures. That is a fraud issue. Anytime there is 
misrepresentation, one of the groups that may look into that, 
and these are a new one, including $14 million in additional 
funding this year.
    Mr. POMEROY. I absolutely do not understand why you have 
got so much more comfort contracting out at taxpayer dollars to 
private entities with no regulatory background and you don't 
want to expand the working relationship with State insurance 
departments, the professionals in consumer regulation, consumer 
protection when it comes to insurance.
    Ms. NORWALK. I absolutely do want to continue to expand the 
relationships we have with insurance departments, which is why 
we have worked----
    Mr. POMEROY. How do you see those relationships? In other 
words, if I am your State partner, I have got to have stuff to 
do, and stuff to do has got to get beyond licensing agents and 
looking at company solvency.
    Ms. NORWALK. I agree, and the medics are one piece of that.
    Let me go through the different pieces. One of the things 
we have done we have signed a memorandum of understanding that 
we developed with the National Association of Insurance 
Commissioners. We have signed that with 27 States, including 
the District of Columbia and Puerto Rico. One of the things it 
does is it allows the States who signed the MOU to have 
password access to see CMS compliance and enforcement actions. 
We would like to have consistent sharing of information between 
the States, CMS, our contractors and----
    Mr. POMEROY. I see that my time is about to expire.
    I will introduce into the record a letter received June 
19th, 2007, by the Chairman and Ranking Member of this 
Committee. It is signed by the President of the National 
Association of Insurance Commissioners and other officials with 
that association of State officials.
    They indicate in this letter: We urge you to restore State 
insurance regulatory authority over Medicare Advantage and 
Medicare prescription drug plans so that States can fulfill 
their traditional role of consumer protection in this area.
    It appears to me that your State partners do not feel like 
they are being partnered with.
    Ms. NORWALK. I am more than happy--I disagree with the 
premise of the letter, that the States need to have the ability 
to sanction the plans. They already have the ability to 
sanction agents and brokers. I think we need to work together 
not only in those two regards but also generally with law 
enforcement to be sure that we can share information, and the 
MOU allows----
    Mr. POMEROY. You know, there is an awful lot of company 
activity that ultimately drives market activities. I have been 
stunned to see protections that we put in place in the late 
eighties, protections I was intimately involved in drafting and 
putting into place now shunted aside by marketing practices of 
companies, that they are basically given this loophole, a 
complete pass on State regulatory authority that has long been 
in place protecting the senior market. I think it is a growing 
problem.
    I see my time has expired, Mr. Chairman. I do want to add 
this for the record, however.
    Chairman STARK. Without objection. It will appear in the 
record.
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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.
---------------------------------------------------------------------------
    \1\ CMS-4068-P, Medicare Program: Medicare Prescription Drug 
Benefit, 69 Fed. Reg. 46632: August 3, 2004
---------------------------------------------------------------------------
    Because of the asset test, the LIS application form is eight pages 
of daunting and invasive questions that are difficult for many people 
to answer. For example, it:

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

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

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

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

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

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

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

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

                                 

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

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

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

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

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

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


                                 

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

                                 

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

                                 

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

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

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

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

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

                                 

                   Statement of Mental Health America
    Mental Health America is dedicated to helping all people live 
mentally healthier lives. Our network of over 320 state and local 
affiliates nationwide includes advocates, consumers of mental health 
services, family members of consumers, providers of mental health care, 
and other concerned citizens--all dedicated to improving mental health 
care and promoting mental wellness. Last November, we changed our name 
from the National Mental Health Association to Mental Health America in 
order to better communicate how fundamental mental health is to overall 
health and well-being.
    Many Medicare beneficiaries struggle with mental illnesses, often 
alone and without medications that have proven widely effective and 
that would likely ease their symptoms and lead to recovery. Some 20 
percent of older Americans experience mental disorders, such as anxiety 
disorders, mood disorders (including depression and bipolar disorder), 
and schizophrenia.\1\ However, two-thirds of older adults living in the 
community who need psychiatric services do not receive them.\2\ 
Furthermore, individuals receiving Medicare because of a disability 
also frequently experience mental illness. According to a survey by the 
Kaiser Family Foundation, psychiatric disorders, such as schizophrenia, 
bipolar disorder, and depression, were the second most commonly 
reported conditions among beneficiaries with disabilities,\3\ and over 
two-thirds of Medicare beneficiaries with disabilities say they often 
feel depressed.\4\
---------------------------------------------------------------------------
    \1\ Administration on Aging, U.S. Department of Health and Human 
Services, Older Adults and Mental Health: Issues and Opportunities, 
2001, p. 9.
    \2\ Medicare Rights Center, Medicare Facts and Faces, October 2001.
    \3\ The Henry J. Kaiser Family Foundation, Understanding the 
Health-care Needs and Experiences of People with Disabilities: Findings 
from a 2003 Survey, December 2003, p. 4.
    \4\ Ibid.
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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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    \1\ CMS guidance now extends this enrollment period to all LIS 
recipients.
---------------------------------------------------------------------------
    If Medicare Part D is to provide full protection for LIS 
beneficiaries, an infrastructure for transferring data in real time is 
indispensable. The many Part D actors include private drug plans, the 
States, the SSA, pharmacies, and a multitude of government contractors. 
Without strong federal leadership, the current complex system will 
continue to breed widespread inefficiency, delays, confusion, and 
errors for beneficiaries.
    To this end, Congress should establish a deadline for CMS 
conversion to a real-time data transfer system. With a single, central 
data system that all relevant parties could access in real time, LIS 
errors would be reduced and beneficiaries would receive fewer confusing 
mixed messages. Pharmacists would receive reliable information about 
their customers' plan enrollment and subsidy status.
    Most immediately, dual eligibles and other low-income beneficiaries 
desperately need an effective safety net for the times when the current 
system fails to deliver accurate LIS information. The current pharmacy-
level safety net for dual eligibles, the Point of Sale (POS) mechanism, 
covers only one type of problem encountered by dual eligibles (delayed 
auto-enrollment).\2\ Dual eligibles and others who encounter problems 
with the LIS or with plan membership are not permitted to access the 
POS mechanism for a temporary supply of medication.
---------------------------------------------------------------------------
    \2\ The POS mechanism also suffers from other major flaws. For 
instance, pharmacists who contract with Part D plans are not required 
to use it. As one advocate explains, ``I frequently hear from clients 
that pharmacists either don't understand POS billing or simply don't 
want to spend the time going through the steps to bill POS.'' Contact 
NSCLC for more information about flaws with the POS and how to fix 
them.
---------------------------------------------------------------------------
    Congress should requie CMS to expand the scope of this safety net 
to cover all LIS problems.
II. CMS Drops LIS Recipients Without Adequate Due Process
    In late 2006, more than 630,000 low-income Medicare beneficiaries--
eight percent of all LIS recipients--were dropped off of the LIS for 
2007 because of a change in their Medicaid status. These individuals 
lost their subsidy effective January 1, 2007, unless they took some 
further action. Appropriately, given the administration's abandonment 
of this group's needs, this population was known as the ``un-
redeemed.''
    CMS failed to take appropriate procedural steps to ensure that this 
vulnerable population would continue to receive access to necessary 
medications. CMS did not review ``un-redeemed'' cases to determine 
whether their income and resources were low enough to remain eligible 
for the LIS or whether they could qualify for the LIS on some other 
basis. The agency simply terminated the benefit outright. While CMS 
asserted that the agency sent a notice to these individuals in 
September, many beneficiaries report never receiving it. Those who did 
receive the notice were told that they must apply with SSA to re-
qualify.
    ``Un-redeemed'' beneficiaries had no opportunity to appeal. As a 
result, individuals who were victims of a CMS mistake (i.e. who were in 
fact still receiving Medicaid) found themselves bounced back from drug 
plans to CMS to SSA and to State agencies. No governmental entity took 
ownership of this problem. To make matters more confusing, SSA 
implemented an entirely separate process for ``redetermining'' LIS 
eligibility for those who qualified for the LIS through an application 
with SSA.
Congress should require CMS to:

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

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

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

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

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

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

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

                                 

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

                                  
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