On September 14, the Senate Finance Committee heard testimony on the proposed rules issued by the Centers for Medicare and Medicaid Services (CMS) on July 26 to implement the prescription drug benefit and Medicare Advantage (MA) plan. Open enrollment for the benefit will begin on November 15, 2005, with coverage to start on January 1, 2006. The programs were enacted as part of the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 (P.L. 108-173).
Chair Charles Grassley (R-IA) explained that the proposed rules “bring the nation’s Medicare beneficiaries an important step closer to having a much-needed, affordable prescription drug benefit and new coverage choices,” adding, “Plain and simple, Medicare has crossed another milestone. Under the proposed rule, about one-third of all Medicare beneficiaries will be eligible for low-income assistance, meaning they’ll have a drug benefit with no gap in coverage, and limited or no premiums, deductibles or cost-sharing. For these drug beneficiaries, the drug benefit will cover as much as 85 to 98 percent of their drug costs.”
Ranking Member Max Baucus (D-MT) argued that there have been “a lot of holes here, a lot of gaps” in the Medicare Prescription Drug Discount Program due to the lack of “adequate guidance” from the CMS. He added that the prescription drug benefit “holds promise,” but warned that the law must be implemented fairly.
Describing “the most dramatic and innovative modifications to the Medicare program since its inception in 1965,” CMS Administrator Mark McClellan said that the prescription drug benefit “will allow all Medicare beneficiaries to enroll in drug coverage through a prescription drug plan or Medicare health plan with Medicare paying, on average, for 75 percent of the premium for standard Medicare drug coverage. Additional benefits for Medicare beneficiaries who have limited means will cover, on average, approximately 95 percent of their drug costs.” Dr. McClellan explained that Medicare beneficiaries would save money on their medications because the benefit would be implemented in the same manner as the Federal Employees Health Benefits Program. “This approach is expected to provide the best discounts on drugs discounts as good as, or better than, could be achieved through direct government negotiation, resulting in prices that will be substantially better than Medicare’s prior experience with price regulation for the drugs that it currently covers under Medicare Part B.” He also noted that the federal government would “subsidize” beneficiaries’ monthly premiums and catastrophic drug costs. “For the first time, Medicare will be paying about $105 a month, per beneficiary, toward the cost of drug coverage for all beneficiaries…In this subsidized coverage, in 2006, beneficiaries enrolling in the standard benefit will pay an annual deductible of $250, plus 25 percent of drug costs, up to an initial coverage limit of $2,250. After that point, once the beneficiary reaches $3,600 in out-of-pocket spending, the Federal government and plans will pay about 95 percent of the beneficiary’s drug costs.”
Addressing concerns that employers will discontinue health coverage for retirees, Dr. McClellan stated, “The MMA contains new subsidies designed to encourage employers and unions to continue providing high quality drug coverage for their retirees. This alternative retiree drug subsidy provides special tax-favored payments to sponsors of qualified retiree PDPs [prescription drug plans]. The retiree drug subsidy program has highly flexible rules that permit employers and unions to continue providing drug coverage to their Medicare-eligible retirees while retaining their current plan designs that are at least equivalent to the standard Part D benefit, and using the retiree drug subsidy to reduce the cost of providing generous coverage. That is, total support for retiree drug coverage is likely to increase as financial support from the new Medicare retiree drug subsidy and the Medicare prescription drug benefit augment employer and union contributions.”
Finally, Dr. McClellan highlighted efforts to improve care for beneficiaries with chronic conditions, explaining that the CMS “will contract with a number of disease management programs to provide services to beneficiaries with a select range of chronic conditions. These disease management programs will use a broad range of proven and promising techniques to help beneficiaries comply with physician treatment plans, drug regimens and lifestyle changes in order to reduce the number of hospitalizations and acute incidents that they experience.” He added, “All MA plans will be required to use disease management techniques to help beneficiaries with chronic conditions and their physicians better manage their health. The increased quality of information that these disease management programs will provide to patients and their physicians, along with their reliance on proven standards of care could result in Medicare beneficiaries receiving higher quality, more effective care at lower costs overall.”
Michael Fitzpatrick, executive director of the National Alliance for the Mentally Ill (NAMI) testified on behalf of a number of organizations, including the Lupus Foundation and the National Coalition for Women with Heart Disease. He expressed their concern that the prescription drug benefit “may not provide adequate access to all necessary medications. Because the Proposed Rule only requires that two drugs be covered in each class, the range of classes becomes a critical benchmark for the range of drugs that enrollees and their doctors will have access to. We believe the classifications set forth in the Guidelines may create confusion and could be used by prescription drug plans to discourage the enrollment of certain beneficiaries, e.g., Medicare beneficiaries with severe disabilities or chronic illnesses who have higher treatment costs.” Mr. Fitzpatrick also detailed concerns that prescription drug plans would “cherry-pick” only the healthiest enrollees. “To avoid the potential for favorable selection and ensure that patients and their providers can reasonably access different therapeutic choices particularly, drug therapies that target vulnerable populations we recommend that CMS place reasonable limits on the cost-sharing requirements a prescription drug plan could employ in alternative, tiered co-payment, benefit packages…Further, to avoid adverse selection problems, we urge CMS to require plans to maintain consistent cost-sharing requirements across all therapeutic classes.” Finally, Mr. Fitzpatrick encouraged the CMS to ensure access to “off-label” medications, explaining, “Off-label use of prescription drugs is common practice in the care and treatment of patients with complex conditions. For example, there are no medications approved by FDA with primary indications to treat lupus. Therefore, proper care of lupus patients requires physicians to prescribe multiple medications off-label…Unintentional oversight of off-label treatments can lead to dire consequences in vulnerable populations, denying medications to frail patients or instituting additional barriers to access.”
