Medicare Prepares To Cut the Cards

U.S. Issues Rules for Drug Discounts

Ceci Connolly, Staff Writer
Washington Post
Thursday, December 11, 2003; Page A37

The Bush administration yesterday released rules for its drug discount card, taking the first step in a two-year process to deliver broader prescription coverage to 41 million Medicare recipients.

And behind the scenes, the administration and private insurers started work on implementing the byzantine, 600-plus-page law.

Although the drug benefit will not be available until 2006, many businesses will begin reaping financial benefits within a few months. As early as March, health maintenance organizations that offer Medicare plans (dubbed Medicare Plus Choice) will be eligible for up to $1.3 billion in higher payments and physicians will receive a 1.5 percent increase in reimbursement rates.

Opponents such as Sen. Edward M. Kennedy (D-Mass.) denounced the move as a "sweet deal" for insurers and a "raw deal for the elderly."

But Health and Human Services Secretary Tommy G. Thompson said the higher payments were necessary to keep HMOs in the Medicare program. "We want them to stay," he told reporters Tuesday.

Administration officials initially said managed-care companies would have to pass that money on to beneficiaries as lower premiums or broader benefits. But industry sources said the $1.3 billion over two years also could be used for higher physician payments.

Bush and his advisers are eager to distribute the drug discount cards as evidence they are bringing fiscal relief to America's seniors. Thompson said he hopes to issue the cards before Bush's June deadline "so we can show the world it can be done and show the president we can beat his timetable."

Under the guidelines released yesterday, any company interested in selling a Medicare-"endorsed" discount card must offer price reductions on at least one medication per category in more than 200 categories of drugs, as well as insulin supplies such as syringes.

Others predicted the cards, which will cost up to $30, would offer limited assistance to a small number of elderly.

"I don't think that drug card will be the world's most thrilling event," acknowledged William D. Novelli, chief executive of AARP, a lobbying organization for older Americans. He added that AARP has not decided whether to sell the card.

Policy analysts at the Centers for Medicare and Medicaid Services (CMS) estimate 7.3 million Medicare recipients are likely to purchase the card, which is expected to provide discounts of about 15 percent. Seniors making less than $12,000 a year will not be charged for the card and will receive a $600 credit.

Although the price tag on the bill is $400 billion over the next decade, not all that money is spent on medicine. HHS will get an extra $1 billion to implement the new program, while the Social Security Administration, which will help determine income eligibility, gets about $500 million. The new money will be spent on computers, new employees and contractors, Thompson said.

Every Medicare recipient will be eligible for a "baseline physical" starting in 2005, Thompson said, touting the new benefit as a major improvement in preventive care.

Since Congress enacted the legislation Nov. 25, calls to the CMS information line have jumped from an average of 20,000 calls a day to nearly 40,000, said the acting deputy administrator, Leslie V. Norwalk. The administration, AARP and the House Republican Conference are developing educational programs geared toward recruiting seniors to participate in the new programs.

Implementation of the new program will take place without the administration official most intimately involved in its development: CMS Administrator Thomas A. Scully, who is stepping down next week. Thompson, who has said he will leave some time after the November 2004 election, promised "I will have everything set up and operating smoothly before I leave."

In the 48 hours since President Bush signed the law creating Medicare's first outpatient drug benefit, supporters and critics raced to shape public opinion of the massive bill, deluging seniors with advertising, letters and town hall meetings.

"Obviously we have some repair work to do with regard to the Medicare legislation and some of our members' views of it," Novelli said. AARP endorsed the bill over the protests of Democrats and some of its own members. In addition to spending $7 million on advertising, AARP sent letters to 9 million members in a dozen states to explain its support.

Senate Minority Leader Thomas A. Daschle (D-S.D.), who opposed the final bill, introduced legislation yesterday that would rescind a provision in the new law prohibiting the government from negotiating with drugmakers on behalf of recipients.


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