Medicare plan creates problems

U.S. Rep. Henry Waxman, D-Calif., has released three reports about the new Medicare prescription drug program. The reports do not reflect well on the new plan.

According to a report on, the reports show: (a) the plans have boosted prices for popular brand-name drugs by more than 4 percent in recent weeks; (b) these Medicare plans charge 14 percent more for these drugs than the Medicare drug cards previously charged; and (c) Medicare drug card providers negotiated only minimal discounts from drug makers.

Another report said the Centers for Medicare and Medicaid Services (CMS) had advance warning that the systems would be unable to reconcile enrollment and eligibility data in a satisfactory manner during the transition period for low-income senior citizens, which began Jan. 1.

“These findings confirm what seniors are discovering: drug prices under the new Medicare drug plans are too high, and they are rising too fast,” Waxman said. “The Medicare drug bill was written to enrich the drug companies, not to provide seniors with a cost-effective new benefit. And the Bush administration’s mismanagement and incompetence has made the problems even worse.”

The first report, about drug price increases, found widespread, rapid and significant increases in cost during the program’s first seven weeks. The10 most popular drugs used by seniors rose an average of 4 percent between December 2005 and mid-February 2006. The ulcer drug Nexium, for example, had a 60 percent cost increase. The report, drafted by the minority staff of the House Committee on Government Reform, said Medicare price hikes were substantially greater than the rise in comparable benchmarks in the same period.

Report No. 2 compares prices now charged by the new drug plans with prices formerly charged by the Medicare drug card program. It found that the new Medicare drug plans are charging prices much higher than were charged last year. The same staff prepared this report as well.

The Government Accountability Office (GAO) prepared the third report for Rep. Waxman. It gives additional detail about the Medicare drug card program, which operated from June 1, 2004, through Dec. 31, 2005. The report reveals that the private sponsors of the drug cards were able to only negotiate minor discounts of 3 to 5 percent from drug manufacturers.

That report also found that drug card sponsors had difficulties with the enrollment process for low-income assistance, including “reconciling enrollment and eligibility data with CMS.” Drug card sponsors reported the CMS had inaccurate information about whether individuals were entitled to aid; that the eligibility data of drug card sponsors often differed from the CMS eligibility data; and that CMS did not give adequate information about which drugs were or were not covered under the drug card program.

Meantime, according to The Washington Post, the administration’s $400 million campaign to enroll low-income seniors in Medicare Part D, has signed up only 1.4 million of the 8 million eligible for the coverage.

At that rate, the federal government will spend about $250 per person enrolled and would still have only 2 million low-income seniors taking advantage of the benefit.

When Congress approved a drug plan for Medicare’s 42 million beneficiaries, it set up a tiered system in which the poorest and sickest people would pay the least. About 6 million elderly and disabled individuals were switched from state Medicaid programs to Medicare coverage. Retirees with greater incomes have a choice of buying a plan with standard personal costs like monthly premiums, deductibles and co-payments.

Seniors earning too much for Medicaid but less than $19,000 annually will qualify for coverage without premiums and deductibles and with co-payments of less than $5. Congress gave the Social Security Administration $500 million to enroll and identify those people.

Officials, however, have encountered problems as they did in previous efforts to enroll low-income citizens in programs such as food stamps or children’s health insurance. Seniors eligible for the benefits tend to move frequently, do not speak English, have mental impairments, or don’t want to be perceived as on the government dole.

Many who have immigrated from other countries and become citizens are reluctant to disclose personal information necessary to sign up for the benefits. Mark McClellan, Medicare chief, told the Post: “Some people think it’s too good to be true.”

The Social Security Administration has been overwhelmed with phone calls, backlogged cases and field office visits that climbed from 140,000 people per day last fall to 200,000 visits in January.

Linda McMahon, deputy commissioner of operations, wrote to her employees: “Those of you on the front line have been expressing your deep concern that SSA is not positioned well to help people understand, enroll in and negotiate” the discount drug plan. “Now we are seeing the consequences of that fact.

“It’s not a rosy picture,” she said, “and the news doesn’t get better. I won’t try to kid you. This is going to be a very difficult year.”

From the March 8-14, 2006, issue

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