On April 8, the Senate Governmental Affairs Subcommittee on Oversight of Government Management, the Federal Workforce, and the District of Columbia heard testimony on the administrative and operational challenges facing the Centers for Medicare and Medicaid Services (CMS) in implementing the Medicare prescription drug benefit. The benefit, which will be available to Medicare beneficiaries in 2006, was enacted as part of the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 (P.L. 108-173).
Chair George Voinovich (R-OH) said that although the Medicare program has been very successful in providing coverage to seniors, “it remains structured for the 1960s health care system.” He noted that the Medicare Prescription Drug Discount Card Program is the first step towards implementing the prescription drug benefit and modernizing the Medicare program, but he questioned whether the CMS has the leadership and expertise it needs to get the job done.
Sen. Frank Lautenberg (D-NJ) expressed his concern that the media advertisements explaining the Medicare Prescription Drug Discount Card Program do little to educate seniors. He also noted that the General Accounting Office has determined the advertisements conveyed political undertones concerning the administration’s position on Medicare reform. Arguing that the administration’s responsibility “is to educate, not spin,” Sen. Lautenberg said that the bias and distortion in the advertisements should be removed.
As in her testimony before the House Ways and Means Committee on April 1, Michael McMullan of the Center for Beneficiary Choices at the CMS summarized the Medicare Prescription Drug Discount Card Program (see The Source, 1/2/04). She also highlighted the progress made by the CMS over the last five months in implementing other aspects of the MMA, including revising payments for drugs currently paid using the average wholesale price, increasing payments to rural providers, and taking steps toward adding preventative services such as a wellness visit, cardiovascular screening, and diabetes screening. Noting that “significant work remains,” Ms. McMullan explained that the CMS will need to hire individuals with expertise in pharmacy benefits management, disease management and prevention, and government contracting.
The subcommittee also heard testimony from two former administrators of the Health Care Financing Administration (HCFA), the predecessor of the CMS. Gail Wilensky, HCFA administrator under the first Bush administration, said that the MMA “represents the largest, most expensive and most complicated set of changes to the Medicare program since its inception.” She said that before the benefit is available, the CMS will need to put in place a bidding process for the selection and pricing of prescription drug plans, establish premium subsidies around the bids, and implement regulations establishing fallback plans. Ms. Wilensky contended that one of the most significant challenges for the CMS is that it lacks staff experienced in working with the pharmaceutical industry. She argued that Congress must understand that any legislation to modify the MMA would “make it extremely difficult, if not impossible, for the benefit to start in January of 2006.”
Nancy-Ann DeParle, HCFA administrator under the Clinton administration, said that the CMS faces both leadership and administrative risks as it prepares to implement the Medicare drug benefit. While former Food and Drug Administration Commissioner Mark McClellan has been sworn in as the new CMS administrator, she expressed her concern that the secretary of the Department of Health and Human Services (HHS), Tommy Thompson, plans to leave HHS after the 2004 election. She also noted that the CMS is suffering a “brain drain” in its career leadership and many more career employees are eligible for retirement. Turning to the administrative risks, Ms. DeParle explained that the CMS must establish relationships with “a whole new set of partners” such as pharmacies, pharmacy benefit managers, pharmaceutical companies, and the new prescription drug plans. She also pointed out, “In order to make sure that the drug benefit’s deductibles, cost-sharing, and catastrophic limits work as stipulated under the law, CMS will have to develop a way to keep track of what each Medicare beneficiary spends on drugs.” Ms. DeParle advised Congress to request that the CMS update its strategic plan outlining what it will take to administer the Medicare drug benefit over the next five years; provide the CMS with more flexibility in its hiring practices; and provide the CMS with the time “to focus on the new prescription drug benefit in the next 18 months, rather than inundating it with new legislative mandates or special pleading.”
