On April 1, the House Ways and Means Subcommittee on Health heard testimony from officials at the Centers for Medicare and Medicaid Services (CMS) and other experts to determine what seniors can expect when the new Medicare Prescription Drug Discount Card and the Transitional Assistance Programs go into effect in June. The programs were enacted as part of the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 (P.L. 108-173).
Chair Nancy Johnson (R-CT) said that the discount card “will help millions of Medicare beneficiaries save money on their prescription drugs.” She explained that the CMS currently has 71 organizations on the list of approved card sponsors, and 27 competing national discount cards will be available to all seniors regardless of where they live. In some regions, seniors will have additional cards to choose from. Rep. Johnson lauded this competition, indicating that it will provide “significant” discounts to seniors.
Calling attention to the date of the hearing, Ranking Member Pete Stark (D-CA) said that the Medicare Prescription Drug Discount Card Program “could be no more than a cruel April Fool’s joke for our seniors.” He expressed his concern that seniors will be confused by the program and vulnerable to “fraudulent and manipulative practices.” Rep. Stark argued that instead of providing the discount card, Congress should have used Medicare’s purchasing power to negotiate lower prices for prescription drugs.
Michael McMullan of the Center for Beneficiary Choices at the CMS summarized the Medicare Prescription Drug Discount Card Program, noting that drug card sponsors would begin marketing and enrollment efforts on May 3, and enrollment would take effect on June 1. Card sponsors may be Pharmacy Benefit Managers, wholesalers, retail pharmacies, insurers, Medicare Advantage plans, or any other nongovernmental organization that meets the law’s requirements. To qualify for the discount card, she explained that Medicare beneficiaries must be enrolled under Medicare Part A and/or Part B, but cannot receive drug benefits under Medicaid. The Transitional Assistance Program also would provide additional assistance of up to $600 for Medicare beneficiaries whose incomes do not exceed 135 percent of the federal poverty level, $12,569 for individuals and $16,862 for couples. To ensure that seniors have convenient access to their neighborhood pharmacies, the bill requires that 90 percent of Medicare beneficiaries live within two miles of a participating pharmacy in urban areas; 90 percent of beneficiaries live within five miles in suburban areas; and 70 percent of beneficiaries live within 15 miles in rural areas. Ms. McMullan stated, “We expect beneficiaries to save an estimated 10 to 15 percent off the retail price on overall prescription drug costs, and up to 25 percent on some drugs…While not a drug benefit, the voluntary drug card program is an important first step in providing Medicare beneficiaries with the tools they need to better afford the cost of prescription drugs.”
Ms. McMullan said that the CMS plans to educate the public through print, radio, and television advertisements that highlight changes to Medicare and explain the new drug discount card. She also noted that the advertisements would direct beneficiaries to a toll-free number and website where they can find additional information. The website also would feature a price comparison tool so beneficiaries can determine how much they could save for drugs at the pharmacies in their area. Ms. McMullan noted that some Medicare beneficiaries have reported receiving calls and in-person solicitations from individuals posing as Medicare officials, attempting to gain personal information such as Medicare account and social security numbers. She explained that the CMS has already informed beneficiaries about how to protect themselves from fraud and noted, “The names of approved card sponsors have been made public and the companies will begin to market their cards through commercial advertising and direct mail beginning this month. Medicare-approved card sponsors will not market their cards door-to-door or over the phone.”
During the question and answer session, Rep. Stark asked whether the 10-15 percent savings for prescription drugs was written into the law. Ms. McMullan responded that it was not in the MMA, that these were expected savings and not guaranteed. She also noted that there was no guarantee that card sponsors would not remove certain drugs from their coverage lists.
In the second panel, the subcommittee heard from two approved card sponsors and Gail Shearer of the Consumers Union. Pointing out that the CMS estimates only 19 percent of Medicare beneficiaries will take advantage of the discount card, she called the MMA a “missed opportunity.” Ms. Shearer argued that the CMS education materials would increase confusion among seniors and pigeonhole them into using only the Medicare Prescription Drug Discount Card Program. “The government is making no attempt to help people compare the Medicare card savings against other discount options like the Pfizer Share card, for which anyone eligible for the low-income assistance would qualify,” she stated. “In effect, by encouraging beneficiaries to sign up for the discount drug card coverage (instead of other discount programs), the government is benefiting drug companies (who will have lower costs for their subsidy programs) at the expense of taxpayers (who will be bearing the cost of the $600 subsidy).” Ms. Shearer encouraged Congress to pass legislation allowing for the importation of prescription drugs from other countries. “Congress has a responsibility to help ensure the quality and safety of these medications in order to protect those consumers who are reimporting drugs,” she stated.
