On June 21, 2000, the House Ways and Means Committee approved H.R. 4680: the "Medicare Rx 2000 Act." The bill was introduced on June 21 by Representatives Thomas, Burr, Peterson, and Bliley and was approved along party lines. This proposal is another in a series of initiatives on Capitol Hill, by Republicans and Democrats, to come up with a proposal, sellable to the American people, to provide a prescription drug benefit for Medicare beneficiaries.
H.R.4680 provides a voluntary prescription drug benefit offered through private insurance or through Medicare + Choice plans. The standard plan would have a $250 deductible, a 50% co-payment, premiums in the $30-$40 per month range, a basic drug benefit amount of $2,100 above the deductible, and a catastrophic coverage cap of $6,000. Insurance companies are also free to construct their drug benefit plans as they see fit with different co-payments and deductibles, provided that plans have an actuarial value of $740.
Access to medications will be through restrictive formularies (list of drugs). Patients requesting non-formulary drugs will have to file an appeal, along with physician certification, that the non-formulary drug is essential and that a similar formulary drug is not effective for the enrollee or has significant adverse side affects such that it is inappropriate for the particular beneficiary.
The bill creates a new Medicare Benefits Administration (MBA) within the Department of Health and Human Services (DHHS). The MBA will administer the dug benefit, including approval of formularies. It will also administer the Medicare+Choice Program. This will fragment and complicate the administration of Medicare since the "traditional" program will still be administered, as has always been the case, by the Health Care Financing Administration.
The bill would also increase payments to Medicare+Choice organizations and remove some of the limitations on reimbursement designed to prevent overpayment to Medicare+Choice organizations and to protect the Medicare Trust Fund. The increases are not tied into any requirement that the organizations provide additional services to beneficiaries or continue to serve in certain markets. Nor does the bill place a limitation on the amount the organizations can charge to plan administration, as recommended by the Office of the Inspector General (OIG). The OIG found in a report issued in January that some managed care organizations had administrative rates as high as 32% of Medicare premium dollars. [OIG, "Administrative Costs Reflected on the Adjusted Community Rate Proposal Are Inconsistent Among Managed Care Organizations." (A-14-98-00210, January 2000).]
The bill significantly re-writes the Medicare appeals provisions applicable to both Medicare Part A and Part B claims, putting the two parts essentially under the Part A system. While many aspects of this approach are useful, it is unfortunate that this set of Medicare appeal rights has been attached to a problematic Medicare drug benefit bill.
In a related development, on June 20, 2000, the Democratic members of the Commerce and Ways and Means Committees held a "Democratic Forum" to discuss the Republican proposal. The Center for Medicare Advocacy, Inc., along with the National Senior Citizens Law Center (NSCLC), presented testimony through NSCLC attorney, Kim Glaun.
In our testimony, we noted that our organizations wholeheartedly support the inclusion of a prescription drug benefit in the Medicare program along with our strong opposition to the Republican proposal because:
H.R. 4680 will not expand access to prescription drugs for all Medicare beneficiaries regardless of income or where they live.
Under the proposal, the drug benefit will not be part of the Medicare benefit package. Rather, beneficiaries will be called upon to purchase private, stand-alone drug insurance policies. The legislation provides that if a given market is left without two or more qualified drug plans, the Government will offer financial incentives to encourage insurers to offer drug products in that region. Moreover, there is no guarantee that such products will be affordable, and therefore truly available to all beneficiaries.
H.R. 4680 substantially reduces subsidies for low-income beneficiaries from earlier prescription drug proposals.
The proposal contains the identical sliding scale as earlier drug bills for government subsidies of premiums and cost-sharing for beneficiaries with incomes up to 150% of poverty. Although beneficiary groups have argued that these subsidies are inadequate, the current proposal reduces rather than expands assistance to low-income beneficiaries. The bill subjects beneficiaries to Medicaid-like resource limitations. We fear persons needing subsidies will likely be forced into the lowest cost plans, with consequent concerns about plan quality and stability.
H.R. 4680 does not curb the rising cost of prescription drugs.
The proposed legislation does not address the issue of rising drug costs. It does nothing to address the needs of seniors and people with disabilities for meaningful and affordable prescription drug coverage.
For more information, contact Vicki Gottlich at the Center for Medicare Advocacy, Inc., health care Rights Project (202)293-5760 or vgottlich@centerproject.org.
NOTE: If you are interested in further commentary you may wish to go to the Medicare section of www.familiesusa.org.
© Center for Medicare Advocacy, Inc. 01/08/2010