Medicare Drug Plan Gets Off to Rocky Start

Nobody expected the rollout of the Medicare prescription drug coverage to proceed without a glitch. The dramatic expansion of the Great Society-era health care program promised under the law enacted in the fall of 2003 was bound to be fraught with administrative and legal headaches. And any such problems were certain to create political fallout among senior voters, many of whom are confused by the new drug benefit and believe the coverage isn’t sufficient to meet their needs.

But even hard-core pessimists didn’t foresee the tales that have surfaced in recent weeks: frail seniors turned away from pharmacies and mentally ill patients suddenly deprived of access to their essential medicines. Governors surely did not anticipate having to declare health emergencies and spending millions to buy drugs that were supposed to be covered by private Medicare insurance plans.

As the Bush administration is eager to point out, the drug benefit, which went into effect on New Year’s Day, has delivered savings to most of the approximately 14 million seniors who have enrolled so far. But it was the most vulnerable beneficiaries — the poorest and disabled — who encountered problems thanks to a single provision in the new law.

Until Jan. 1, Medicaid, the medical insurance program for the poor shared by both the federal and state governments, covered the prescription medicine bills of beneficiaries who qualified for both Medicare and Medicaid — a group of some 6.3 million people known as “dual eligibles.” The 2003 law required them to choose a Medicare drug plan or be automatically assigned to a private plan. Problems arose because many of those beneficiaries only changed plans in December and the information was not updated in Medicare’s databases in time for the introduction of the drug benefit.

The result was that seniors were turned away at the pharmacy counter or dunned hefty co-payments. More than 20 states have stepped in and paid tens of millions of dollars to cover the individuals just in the past month. The administration says the states will be reimbursed, either by health plans or the federal government, and promises that the confusion will be sorted out promptly.

But it is difficult to predict how long it will take to make everyone whole, and whether new problems will pop up as more seniors enroll. And even if the current complications are fixed, the rollout has reopened a partisan rift over health care that is bound to be revisited often by candidates in the mid-term elections. Democrats, who opposed the 2003 law because of the way it converted Medicare into a market-oriented health delivery system, have revived their old talking points and accused the GOP of mortgaging seniors’ well-being in order to benefit drugmakers and insurance companies. Republicans are somewhat divided over whether Congress or the administration should be responsible for tweaking the program — or whether to make changes at all.

How the different factions in Congress are lining up, and what they want now:

Gloating Democrats

The party’s membership in Congress overwhelmingly opposed the enactment of the law 26 months ago, and they have been quick to charge that the crisis is evidence of the Bush administration’s ineptness, drawing parallels to the bungled federal response to Hurricane Katrina. Senate Minority Leader Harry Reid of Nevada has gone further, saying the public is paying the price for “a Republican culture of corruption” that prompted the GOP- controlled House and Senate to design the benefit primarily for the benefit of the big drug companies.

Beyond trying to embarrass the administration and congressional supporters of the overhaul who are up for re-election, some Democrats have offered proposals that would undo key aspects of the Medicare overhaul.

Sen. Debbie Stabenow of Michigan, for example, intends to propose legislation that would establish a Medicare drug plan administered by the federal Centers for Medicare and Medicaid Services (known as CMS) instead of by private insurers. The proposal is a virtual non-starter because the Medicare law envisions giving insurers a greater role administering Medicare benefits in order to spur private competition and keep health costs down.

A group of Democratic senators — including Stabenow, John D. Rockefeller IV of West Virginia and Frank R. Lautenberg of New Jersey — have introduced a bill that would require the federal government to reimburse states and Medicare beneficiaries for money they have spent on prescriptions while problems with the program are sorted out. They also want private health plans to cover a 30-day supply of a drug even if it is not included on their formulary — the plan’s own list of approved drugs — in order to give seniors time to get new prescriptions or talk to their doctor.

The administration’s announcement that it would reimburse states for costs that they cannot recoup from the individual insurers addressed some of the concerns. However, many Democrats are calling for a more open-ended reimbursement system, speculating that more problems will develop with the new system.

Democrats have enumerated other changes they want to make, including extending the deadline for seniors and the disabled to sign up for a drug plan without being penalized with a late fee, allowing beneficiaries to switch plans once in the first year and requiring drug plans to keep the same drugs on their formulary for the entire year. None of these proposals have any real chance to get through Congress.

Expectant Republicans

Some Republicans in the House and Senate who voted for the law are openly criticizing the administration for mishandling the dual eligibles while expressing a conviction that the problem can be resolved without congressional action. They believe the CMS and its bureaucratic parent, the Department of Health and Human Services, have to make the process of obtaining Medicare drug coverage more user-friendly, perhaps by extending a May 15 deadline to sign up. Seniors may enroll after that but will have to pay a late fee.

Senate Finance Chairman Charles E. Grassley is part of this faction. Last week the Iowa Republican, one of the principal authors of the law, urged administration officials to speedily resolve the crisis but added the problem was in the implementation of the law, not in the design of the benefit.

“It’s unacceptable that some of the poorest and sickest people are having the most trouble, and it’s not what Congress intended,” Grassley said. Of those administering the law, he said: “I’ll make sure they stay on top of this.”

Grassley has reason to urge against congressional action. Re-opening the law, even to fix an obvious problem, would encourage proposals for other changes and likely prompt Senate Democrats to use the chamber’s rules to force votes that could embarrass Republicans during the campaign season. Democrats, for instance, would savor an opportunity to remind voters that the Medicare law blocks the government from negotiating volume discounts on drug purchases for seniors — a provision the Democrats say will keep prices high and amounts to a sop to big pharmaceutical companies.

HHS Secretary Michael O. Leavitt has enumerated other steps the administration is taking to alleviate problems, including smoother data transmission of patient information to private insurance plans, more customer service personnel at Medicare and at private health plans, and a stronger surveillance to ensure drug plans are complying with the law.

Such steps are, for the moment, mollifying influential GOP moderates, such as Sen. Olympia J. Snow of Maine, who also thinks the administration should be doing more to ameliorate the situation but is wary of congressional action. But Snowe still may work with Democrats to extend the May 31 deadline.

The Silent Faction

As disabled and poor elderly people began to report problems filling their prescriptions in early January, the first public statements from the administration cast the problems as a concern, but one that was not entirely unexpected. That calm tone was fine with the majority of Republicans in Congress, who sense Medicare could quickly turn into a radioactive issue and are more than happy to let a lame-duck administration do the explaining. In the nearly one month since the problems surfaced, few Republican House members have publicly acknowledged the problems.

Senate Majority Leader Bill Frist of Tennessee, a likely GOP presidential candidate in 2008, also has been conspicuously silent, other than deflecting calls for legislative fixes. “Sen. Frist is working with HHS . . . to address the implementation issues,” says his spokeswoman, Amy Call.

The reluctance to weigh in is a carry-over from 2003, when Republican leaders had to twist arms to prevent their rank and file from abandoning the drug benefit idea in droves. But the silence could backfire if problems persist and Republicans appear to be ignoring seniors’ problems. Making some minor changes would be more politically palatable to the majority of GOP lawmakers than to risk alienating an important voting block and stoking contentions that they are most concerned about keeping drugmakers and insurers content.

Vindicated Conservatives

GOP fiscal conservatives are in an unusual position because many opposed a costly expansion of Medicare and now feel vindicated by recent Congressional Budget Office estimates showing the drug program will cost $1 trillion or more over the next decade — considerably more than the officially projected cost at the time the law was written. However, any public gloating will only amplify Democratic criticisms of the drug program. And few of the conservatives would argue against spending more to reimburse states for the costs they incurred ensuring the dual eligibles will get their medicines.

Some in this group — such as Senate Budget Chairman Judd Gregg, whose home of New Hampshire had to spend heavily to help its low-income seniors — are taking the position that CMS must cut bureaucratic red tape to make the drug benefit viable.

Others have bolder fixes in mind. In the House, Jeff Flake of Arizona has broached the idea of delaying the drug program altogether for a year “to give everyone a chance to take a second look at cost and implementation,” according to his spokesman, Matthew Specht. “Momentum is going to build this year for some reform bills,” he added.