Before the Health Subcommittee, Committee on Ways and Means

 May 3, 2006


The Center for Medicare Advocacy, Inc. (the Center) submits this testimony to be included in the record of the hearing on Implementation of Medicare Part D, held before the Health Subcommittee of the Committee on Ways and Means on Wednesday, May 3, 2006.


Founded in 1986, the Center is a national, non-partisan educational and advocacy organization that identifies and promotes policy and advocacy solutions to ensure that elders and people with disabilities have access to Medicare and quality health care.  The Center’s national office is in Connecticut, with offices throughout the country, including Washington, D.C.  The Center represents thousands of individuals in Medicare appeals each year, responds to calls and e-mails from individuals in Connecticut as well as from all across the United States, and provides support to CHOICES, the Connecticut state health insurance program. Requests to the Center for assistance have increased exponentially with the advent of Medicare Part D.


The White House and the Centers for Medicare & Medicaid Services (CMS), in their efforts to promote Part D, proclaim that “the new drug program is working well for most seniors (sic) and pays nearly all of low-income beneficiaries' drug bills.”  See, e.g., "The Medicare Prescription Drug Benefit: Helping Seniors and Reducing Costs," a Fact Sheet issued by the White House on March 14, 2006.


What they do not say is that many of the beneficiaries encountering problems are dually eligible for Medicare and Medicaid (dual eligibles). The barriers to their getting drugs that were previously paid for by their Medicaid programs are not temporary glitches but result from the very design of the Part D program.  The Center avers, based on our conversations with Medicare beneficiaries, their families and their advocates, that this most vulnerable population is, as a whole, much worse off than they were before they were shifted from Medicaid to Medicare drug coverage.


Problems and recommended solutions include:


1.  Dual eligibles have been randomly assigned to average-cost prescription drug plans, most of which do not cover all drugs commonly used by this population.


To ensure no gaps in coverage when dual eligibles transition from Medicaid drug coverage to Medicare drugs coverage, the Medicare Modernization Act provides for them to be randomly assigned to plans if they do not choose a plan on their own. Random assignment benefits Part D drug plans by guaranteeing them an equal portion of the enrollment of the dually-eligible population, without burdening them with too large a portion.  Random assignment does not, however, benefit beneficiaries.


The Inspector General of the Department of Health and Human Services has determined that nearly one-third of dually eligible beneficiaries – a highly vulnerable population with unusually high medication needs - were assigned to drug plans that included less than 85% of the 178 most commonly used Part D drugs.[1]  Some of the drugs excluded from a substantial number of plan formularies (lists of covered drugs) are drugs for high blood pressure, high cholesterol and pain relief.


Only 18% of beneficiaries were assigned to plans that covered all 178 drugs, but this does not mean that even these plans cover all drugs needed by each beneficiary - only that they cover the most commonly used drugs.  Moreover, even plans that cover all drugs may have quantity limits, prior authorization and other barriers to immediate and full coverage of an individual beneficiary's prescription drug needs.


Other researchers came to similar conclusions after reviewing formularies of plans available in specific regions.  For example, Jocelyn Guyer and Jeffrey S. Crowley of the Georgetown Health Policy Institute wrote a series of three policy briefs for the Connecticut Health Foundation. They found large variations in the extent to which the 44 stand-alone prescription drug plans available in Connecticut covered medications, with major and frequent shortcomings in coverage of critical drugs used by dual eligibles.[2]


A 33 year-old beneficiary from Orange Park, Florida, described the difficulties experienced by dual eligibles in an e-mail sent to the Center last week: [3]


I have been on Medicaid since 1996, and Medicare since 1998. I get Social Security Disability, and I am below the poverty level. Since Medicare Part D., has kicked in. I have had to pay for medicines that Medicaid used to pay for, now I'm responsible for the co-pays of my medicines. I am a kidney transplant patient and have been a diabetic for 30 years. I also have been diagnosed with HIV in 2001. I can't pay for my medicine copays, because I make approximately $8,500 a year. Even with the "extra help" that I get from Medicaid, I still have to pay about $40 a month for medicines. However, my medical insurance doesn't cover my transplant medications or my HIV medications. These medicines cost about $400, a month. What has the president done? Is there a plan to kill off the elderly and sickly, or do we just have to suffer the consequences? Thank you for letting me speak my peace.



Center for Medicare Advocacy Recommendation: In assigning beneficiaries to plans they have not chosen, more attention must be given to matching individual beneficiaries' drug usage and pharmacy preferences with the formulary and pharmacy networks of individual plans.


2.  Getting coverage for drugs that are not on a plan's formulary involves engaging in one of several complex processes.  The frailty of this population, including a high incidence of cognitive impairments, makes navigating those processes more difficult than for other beneficiaries.


Applying for an Exception. Each plan must have a process for enrollees to ask for an exception to non-coverage, and each plan's process is different.  The Center is part of a group, spearheaded by the American Medical Association (AMA) and working in conjunction with America’s Health Insurance Plans (AHIP), which has developed a model exceptions request form. Although CMS has posted the model form on its web site, and AHIP members may post the form on their web sites, CMS does not require the form to be used by the plans. 


An exception request must include a doctor's statement that all drugs on the formulary are either less effective or harmful to the beneficiary or both.  Some plans are requiring the submission of clinical notes verifying such assertions. Because each plan's process is different, physicians must deal with multiple processes to serve all their patients. Some doctors are charging for completing prior authorization and exception request forms. Dual-eligible beneficiaries who cannot pay even nominal fees for this service cannot avail themselves of the exceptions and appeals processes.


The problems that arise from trying to navigate the exceptions process are almost too numerous to include in testimony.  The issues brought to our attention by Medicare beneficiaries, their families, and their advocates include:



Changing prescriptions. Plans encourage enrollees to change from an uncovered drug to one on their formulary.  Such a change presumes that there is a drug on the formulary that would work as well as the uncovered drug.  Making such a change may involve multiple visits to a doctor's office, each of which may cost money in terms of transportation and office visit co-pays, for the doctor to first prescribe, and then monitor, use of the alternate drug. Duals often do not have the resources to pay for the transportation or the cost-sharing for such visits.  Since many use clinics, they may not be able to get an appointment with a doctor before their medication runs out.


Changing to a plan that covers the drug in question. Unlike most Medicare beneficiaries, dually eligible beneficiaries are allowed to change plans whenever they want to, with their new coverage effective the month following their action to change. Changing plans, however, is difficult and not without risks.  First, the number of average cost plans in each region ranges from six to eighteen and the systems available to help beneficiaries know what each plan covers require access to high speed Internet service and a printer.  Few dual-eligibles use the Internet, so to make use of these decision supports, a beneficiary must generally get help from someone else.  The programs that are funded to counsel beneficiaries are overwhelmed by people needing such assistance and by the many difficulties that have arisen during the first months of the program.


Moreover, processing new enrollments in a plan is complex, requiring communication between the old plan, CMS, the new plan, and another government contractor.  The information takes days to weeks to run through the system; a change made toward the end of the month will not show up in the system until later the following month, making it difficult to purchase drugs in the first part of the month.


Finally, plans can change the drugs on their formularies at any time, with 60 days' notice to individuals taking the drugs in question.[4]  Even an intelligent choice of a plan covering all of a beneficiary's current drugs could be for naught, if the plan removed some or all of those drugs from its formulary two months later.  An April 27, 2006 Memorandum from Abby Block of CMS to Part D Sponsors, "Formulary Changes during the Plan Year," suggests that plans continue to cover a drug for any plan enrollee who is currently taking the drug even after the plan removes the drug from its formulary for other enrollees. Unfortunately, this CMS Memorandum to exempt current enrollees from formulary changes involving their current drugs is not binding on any plans.  This Memorandum, like the rest of the policy guidance issued by CMS to implement much of Part D, has not gone through the Administrative Procedure Act notice and comment rulemaking process, and does not have the same legal effect as the statute and the implementing regulations.


The consequences to beneficiaries are enormous, as these client experiences demonstrate. 


It was extremely stressful to get a plan picked out that would even cover my medicines, I'm disabled not old and every step of the way has been a battle.  The insurance company STINKS.  I have to fight for nearly every prescription.  From getting the right generic to one they prefer.  It's almost like they are my Dr, not the insurance plan.  I have had to go the the ER several times becuase I was forced to wait or fight for meds that would have helped.  I also have athsma and now they are denying my singulair, suddenly some crap about needing pre-approval.  This is some of the worst insurance ever.  Medicare Part D is one of the worst things the Bush administration has done.


– E-mail dated April 26, 2006, from a 35 year old female in Hawley, Minnesota.



My other half has AIDS and our pharmacist suggested that we go with AETNA because it covers all his HIV meds as well as all the other meds he's on.  So we signed him up for it and now it seems like each month they are not wanting to pay for certain non-HIV medications.  They want him to take something else.  One of those is to prevent him from getting pneumonia.  It's Bactrum.  Their formulary on-line says they will pay for it, but their letters keep saying they won't.  After one month he's already into the catastrohic coverage part because of all the meds he's on.  Every month it's a different story, a different medication is being denied.  What gives them the right to play doctor with people's lives?


–  E-mail dated April 26, 2006, from a 42 year old male in Land o Lakes, Florida


Center for Medicare Advocacy Recommendations: 

(1) Exceptions processes should be uniform for all plans, with a single form made available to all physicians and pharmacists;

(2) Plans should be prohibited from removing drugs from their formulary during the plan year; 

(3) More money should be made available to programs that provide individualized assistance to beneficiaries.


3.  Plans' transition policies have been difficult to get and difficult to enforce at the pharmacy level.


Each plan is required to have a transition process to address the situations of new enrollees who are taking drugs not on the plan's formulary.  The transition policies include special focus on the needs of dually eligible beneficiaries.  While issues with transitions have been prominent in the early months of Part D because the entire program was "transitioning" into existence, transitions will occur every month as new enrollees join plans, and especially every January, after major plan shifting has occurred during the annual enrollment period in November and December.


CMS asked plans to extend the transition coverage of non-formulary drugs through the end of March, so that beneficiaries could get a 90-day supply.  Such an extension was voluntary on the plans' part.  And, even after the extension request, dually-eligible and other beneficiaries are coming away from the pharmacy with no prescription, or with just a few days' supply of pills.


Moreover, the transition is merely to allow the beneficiary to change drugs, change plans, or request an exception so that her drug can be covered even though it is not on the formulary.  But many beneficiaries are not receiving the notices they are supposed to get telling them what they should do next.  For example, Center staff spent many hours during February and March 2006 helping a woman in California get coverage of a prescription that she had been taking for 35 years for a chronic condition.  (Part of the problem was that the plan could find no record of her enrollment until mid-February.)  She contacted us last week to say that, although she had received the prescription in February and March, the plan was once again telling her that the drug was not covered.  We suspect that she got the drug in February and March under the transition process, and now the plan wants her to go through the exceptions process – again – to get her medically necessary drug.


A 58-year old male from Jellico, Tennessee commented to the Center via e-mail about the transition process:


I Called First Premier Health(my Provider For Part D to see if All My Medications Were Covered before I Signed on With Them, They Assured Me They Were, After 2 Month's They Wrote Me A Letter Saying that My( Pravachol) Was No Longer Covered, I Had to Try Alternative Meds First, Hell I've Tried Them All, Pravachol Works The Best For Me, I've Been On It For Over 4 Years Now!! This Does Not Make Any Sense!!!  Thank You!! I Have Always been Taught When Something Works Real Well For You, Stay With It!!!!


Center for Medicare Advocacy Recommendations:

(1) Transition policies should be uniform across plans and easily made known to beneficiaries and pharmacists;

(2) Plan call lines, for pharmacists to get instruction to override codes, should be required to operate 24 hours a day, seven days a week; 

(3) CMS should enforce contract requirements of plans.


4.  Dually eligible beneficiaries using long-term care services are treated differently depending on where they receive the services.


Dually eligible beneficiaries are provided the best Part D subsidy available under the law.  They pay no premium (for an average cost plan) or deductible, have no coverage gap (doughnut hole) and no cost-sharing at all after they reach the catastrophic coverage threshold.  Their co-payments vary from $0 to $5, depending on income or place of residence.


Dually eligible beneficiaries residing in nursing homes and certain other institutions have no co-payments, since they pay all but a very small amount of their income over to the institution that is caring for them.  Dually eligible beneficiaries who are getting their long-term care services in assisted living facilities, board and care, and other similar community settings, however, are treated differently and may have co-pays as high as $5 per prescription (for typically more than 10 prescriptions), even though they, too, must pay most of their income to their care provider and even though their care needs are similar to those of nursing home residents.


Center for Medicare Advocacy Recommendation:  All dually eligible beneficiaries receiving long-term care services should be treated similarly and should have no cost-sharing obligations, since most of their income is given over to the provider of service.


5.  Dually eligible beneficiaries have lost Medicaid as secondary coverage.


The most common interrelationship between Medicare and Medicaid is that Medicare is the first payer for services and Medicaid picks up where Medicare coverage stops.  This is not true under Part D.  Medicaid is prohibited from paying for drugs that are covered by Part D.  For a state to provide the kind of "wrap around" coverage that is typical for other services, it must use its own money, without any federal contribution.  According to the Inspector General of the Department of Health and Human Services, only four states have indicated they will provide some kind of coverage for drugs that are not on a Medicare plan's formulary.


Part D imposes prescription drug co-payments for the first time on a substantial number of dual eligibles, including the 1 million dual eligibles in California (approximately one-sixth of the dual eligible population). While the co-payments for duals are supposed to be minimal, for someone living on $817 (100% of the federal poverty level for an individual) or less each month, $3 per prescription is a fortune.  As a beneficiary from New York wrote to the Center recently, she lives on Social Security disability benefits and cannot afford to pay the $3 co-payment every time she goes to the pharmacy.


For some dual eligibles who previously qualified for Medicaid on a “spenddown” basis, the advent of Part D means they will lose all of their supplemental health coverage.  A 60-year old client from Milford, Connecticut, who has Hepatitis C, has long alternated between Medicaid and ConnPACE, the state pharmacy assistance program, to help with prescription costs during his spenddown periods.  He takes several very expensive medications and qualifies for the low-income subsidy.  In fact, prior to Part D, when the entire cost of his medication – including the portion paid by ConnPACE – was applied against his spenddown, he usually met his spenddown obligation in less than one month.  With the advent of Part D, only that portion which he pays – his $2 and $5 LIS co-pays – will count against his spenddown obligation.  Our client correctly perceives that he will probably never meet his $3,000 spenddown obligation at this rate.  He currently is in need of an expensive medical test that he cannot afford, and is having difficulty finding a provider who will accept him as a patient as he no longer has Medicaid coverage and is unlikely to obtain it in the future.


Center for Medicare Advocacy Recommendation: 

(1)   Amend the law to provide dual eligible coverage for prescription drugs, just as it exists for other health care services, including federal matching funds for state expenditures;

(2)   Amend the law to allow Part D drug costs, including the low-income subsidy, to count toward Medicaid eligibility based on spenddown.



6.  Individuals with Medicaid will experience a gap in prescription drug coverage when they first become eligible for Medicare.


Individuals with Medicaid lose their Medicaid drug coverage on the first day of the month that they become eligible for Medicare, even if they have not enrolled in a Part D plan.  The state will transmit information about them to CMS when the state becomes aware of their new dual eligibility status. It is unclear, however, whether and when states will have that information.  In addition, states often send information to CMS about new dual eligibles only once a month, generally at the end of the month.  CMS may not be able to enroll a new dual into an eligible plan in time for drug coverage to begin the following month.  CMS has indicated that Part D coverage will be retroactive, but it is unclear how duals will pay for their prescriptions while coverage and plan enrollment is being determined.


New dually eligible individuals can use the Point of Service (POS) option at the pharmacy that facilitates enrollment into the point of service contractor.  The contractor will then inform CMS so that the individuals can be enrolled into a plan.  Under the POS option, the pharmacy distributes a 14-day supply of medicine to the individual, with the possibility of an additional 14-day refill.  Individuals who try to get prescriptions under this option at the beginning of a month may not have sufficient medicine to last until they are enrolled in a Part D plan.


Center for Medicare Advocacy Recommendation: Identify Medicaid recipients who are about to become Medicare eligible sufficiently in advance to auto-enroll them in a Part D plan before they lose Medicaid drug coverage.  Alternatively, continue Medicaid drug coverage for these individuals until they are enrolled in a Part D plan.




Many of the problems and issues described above arise from or are complicated by the number of plans available and the fact that each plan has its own design, including formulary, transition processes, exceptions and appeals processes. Virtually no uniformity exists or is required.


Even after beneficiaries, their families, and their advocates spend hours and days on the phone trying to resolve issues with their Part D plans and with CMS, there is still no guarantee that the problem will be resolved. Our client, Mary F., from Willimantic, Connecticut, exemplifies the problem. She gets by on limited income, and it is not unusual at the end of any month that she is down to her last $5 in quarters for her laundry.  She takes several medications, among them a pain reliever for severe gout.  She is on ConnPACE and a Medicare Savings Program.  She has documentation that she was awarded the full 100% low-income subsidy, and thus should be paying $2 or $5 for co-pays.  However, Medicare has informed her plan that she qualifies for a partial subsidy, with 15% co-pays.  Mary cannot afford to pay even ConnPACE's $16.25 co-pays and, therefore, has gone without a new pain medication her physician prescribed a week ago.   She is owed over $70 in co-pay overpayments to her pharmacy and has been told it may take up to 10 weeks to be reimbursed. Despite repeated efforts on the part of the Center, as well as CMS's intervention in this case, the problem persists. 


Overall Center for Medicare Advocacy Recommendations:  Create a single, standard Medicare prescription drug benefit, administered by the Medicare program, that is uniform nationwide. Require CMS to oversee the program with mandatory due process standards.


Thank you for the opportunity to submit this written statement.  We look forward to working with Congress to ensure that elders and people with disabilities have access to a meaningful and affordable Medicare prescription drug benefit.


Judith Stein, Executive Director

Patricia Nemore, Senior Policy Attorney

Vicki Gottlich, Senior Policy Attorney


[1]   Office of Inspector General, “Dual Eligibles” Transition:  Part D Formularies’ Inclusion of Commonly Used Drugs,” (OEI-05-06-00090 January 2006).

[2]  The policy briefs are available at www.cthealth.org.  Judith Stein, Executive Director of the Center, was a research contributor to the policy brief on Implications for dual eligibles.

[3] Beneficiary comments are verbatim and may contain grammar mistakes.

[4] Note that the regulations specifically allow Part D plans to change their formularies.  42 C.F.R. § 423.120(b)(5),(6).

Copyright © Center for Medicare Advocacy, Inc. 08/19/2013