On July 19, the Senate Special Aging Committee heard testimony regarding the implementation of the Medicare Prescription Drug Discount Card and the Transitional Assistance Programs that went into effect on June 1. Witnesses also addressed the prescription drug benefit that will go into effect in 2006. The programs were enacted as part of the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 (P.L. 108-173).
Explaining that the purpose of the hearing is to examine how the MMA will benefit low-income seniors, Chair Larry Craig (R-ID) stated, “Nearly half of the new law’s funding is targeted specifically to lower-income seniors and more than one in three seniors will qualify for assistance. For the vast majority of these seniors, this will mean zero premiums, zero deductibles, no gaps in coverage, and copays of just a few dollars per prescription. It is difficult to imagine a stronger package.”
Highlighting the “early success” of the Medicare Prescription Drug Discount Card Program, Centers for Medicare and Medicaid Services (CMS) Administrator Mark McClellan said that approximately 4 million individuals have enrolled in the program since June, and an additional 25,000 beneficiaries sign up for a Medicare-approved card every business day. He explained that a new CMS study has “shown that the cards generate savings on brand name drugs of between 11 and 18 percent from the average price paid by all Americans, even those with health insurance. This same study showed steeper discounts off of generic drugs, in the range of 35 to 65 percent from what is paid, on average, for prescription drugs by all Americans.” Dr. McClellan also noted that low-income individuals eligible for the Transitional Assistance Program could “save 32 to 86 percent over national average retail prices over a 7-month period, when both the discounts and [the] $600 transitional assistance are taken into account.” In order to reach out to the more than 7 million Medicare recipients who also are eligible for the Transitional Assistance Program, Dr. McClellan explained that the CMS has set up an “auto-enrollment” program to enroll beneficiaries currently participating in State Pharmacy Assistance Programs, has made $4.6 million available for community-based organizations to help educate and enroll seniors in the program, and has provided additional funding to State Health Insurance Assistance Programs.
Dr. McClellan argued that the MMA provisions specifically geared towards low-income individuals will have a large impact on minority populations: “The MMA provides over 7.8 million minority Medicare beneficiaries with access to a prescription drug benefit for the first time in the history of the Medicare program. The poorest minority beneficiaries the nearly 2 million with incomes below 100 percent of FPL [federal poverty level] who are eligible for full benefits under Medicaid will pay no premiums, no deductibles, and only nominal cost-sharing of $1 for a generic drug or a preferred multiple source drug and $3 for all other drugs. In addition, by moving out of their current Medicaid programs and into the new Medicare drug benefit, they will not be limited to any state imposed restrictions on the types or amounts of drugs they can receive.” He also noted that minorities would benefit from preventative services, including cardiovascular blood tests and diabetes screening. Finally, Dr. McClellan said that disease management services would “provide beneficiaries with the tools and support systems to help them manage their chronic illnesses and [would be] likely to substantially benefit minorities.”
Dr. McClellan explained that Medicare beneficiaries would have two options for receiving the prescription drug benefit in 2006: “First, they may choose to receive their full Medicare benefits (including hospital care, physician services, home health care, preventive services, and others) and the new voluntary prescription drug benefit through a ‘Medicare Advantage’ plan. These plans may be preferred provider organizations (the most popular choice among federal employees), health maintenance organizations, or other styles of private plans. Alternatively, seniors may enroll in CMS’s original fee-for-service programs, and choose to receive drug benefits through private drug plans that will be approved by CMS to provide the new prescription drug benefit.” Open enrollment will begin on November 15, 2005, and run until May 15, 2006. Dr. McClellan said that in subsequent years, “Open enrollment will run from November 15 to December 31 for the next benefit year.”
During the question and answer session, Sen. Debbie Stabenow (D-MI) focused her comments on the asset test, which would determine if a low-income individual is eligible for the Transitional Assistance Program. Under the MMA, an individual with assets in excess of $6,000 would not be eligible for the program. Sen. Stabenow expressed her concern that an individual with a life insurance policy, savings set aside for a burial plot, or a wedding ring worth more than $6,000 would not be eligible for the $600 in transitional assistance. Dr. McClellan explained one-third of all Medicare beneficiaries are going to qualify for the assistance, and stated that the CMS would take precautions to implement the asset test “in a way that’s fair.” Sen. Stabenow responded, “We’ll be watching very closely.”
Dr. Gail Wilensky, a senior fellow at Project HOPE, described how the MMA would benefit low-income seniors. She said that the most important feature of the bill “is that low-income individuals will receive the full $600 for 2004 even though the program only starts mid-year. Second in importance is that individuals who do not spend the full $600 may rollover any remaining funds to 2005. The rollover provision of unused funds, if applied elsewhere in current law such as the flexible spending accounts used by many employees, would fundamentally change the ‘use-it-or-lose-it’ feature that currently characterizes these accounts.” Dr. Wilensky added, “The cash assistance is an important subsidy to the low-income population but it does not provide for 100% coverage even within the first $600 of prescription drug spending. As part of a deliberate policy statement, the Congress decided that low-income seniors should pay something for their drugs, even for the first $600. Individuals with incomes below 100% of the poverty line pay 5% of the cost, which means a maximum of $30. Individuals who are between 100% and 135% of the poverty line pay 10% of the costs or a maximum of $60.” Dr. Wilensky argued that Congress should not consider legislation to amend the MMA before the prescription drug benefit goes into effect in 2006. “To make changes during the next year is to seriously risk the start date. As is shown in this and other testimonies, delaying the current legislation would have a serious and negative effect on the lowest income beneficiaries.”
Testifying on behalf of the Access to Benefits Coalition (ABC), Dr. Jane Delgado, president and CEO of the National Alliance for Hispanic Health, focused her comments on the impact the MMA will have on Hispanics. “Today, there are over 2.8 million Hispanic Medicare beneficiaries and that number will continue to grow. Indeed, Census estimates have shown that the proportion of Hispanics who are elderly (65 years of age and older) will increase more than three-fold from 4.0% today to 14.1% in the year 2020. Also, Hispanics will represent an increasing proportion of the senior population overall as the life expectancy for Hispanics is longer than that of other populations. The most recent projections by the Census Bureau put life expectancy for Hispanic men at 77.2 years compared to 74.7 years for non-Hispanic white and 68.4 years for non-Hispanic black men. Life expectancy for Hispanic women is even longer at 83.7 years which compares to 80.1 years for non-Hispanic white and 75.1 years for non-Hispanic black women.” Dr. Delgado explained that Hispanics “have been reported to have a variation in the structure of a gene affecting the metabolism of many common drugs, requiring differences in dosing and access to a broad choice of pharmaceuticals in order to achieve a therapeutic effect…Given the differentials in response to medicines, future Medicare prescription benefit policy must support financing and reimbursement practices that are broad and flexible enough to enable rational choices of drugs, dosages, and formulations for Hispanic patients based on their genetic, medical, and cultural needs.” Pointing out that 69 percent of Hispanic seniors with a chronic illness do not have prescription drug coverage, Dr. Delgado stated, “Beginning in 2005, Hispanic Medicare beneficiaries will benefit from new benefits for diabetes screening as well as cardiovascular disease in addition to current covered screenings such as mammograms. The Department of Health and Human Services has released new estimates showing Medicare preventive care screenings will be available next year to 2.8 million Hispanics for cardiovascular screening blood tests; 690,000 Hispanics for diabetes screening; and a ‘welcome to Medicare’ initial exam for 130,000 new Hispanic Medicare beneficiaries every year.”
Dr. Delgado said that “conflicting information on the benefit, distrust of federal information sources, and a lack of community-based resources to assist in benefit sign-up threaten to limit the number of Hispanic Medicare beneficiaries that will use the new prescription buying power offered by Medicare. Given the history of outreach to underserved communities, without a robust community-based capacity to assist Hispanic consumers many eligible Hispanic Medicare recipients are likely not to take advantage of the transitional assistance or not be reached early when they are eligible for the full $1,200 in transitional assistance.” She explained that the ABC has launched La Promesa “to establish a Hispanic community capacity to support sign-up for new Medicare prescription benefits.”
