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VGM Legislative Update - July 8, 2005 |
Jul 11 2005 8:20AM |
MEDICARE: PBS' 'NOW' TO DISCUSS IMPLEMENTATION OF 2003 LAW
PBS' "NOW" on Friday is scheduled to include an update on implementation of the 2003 Medicare
law. The program is expected to discuss the Bush administration's recent estimate that the total cost
of the new prescription drug benefit will be $724 billion over the next 10 years; exclusion of
coverage for a category of drugs called benzodiazepines, which are used to treat anxiety, insomnia
and seizures; and the so-called claw back provision, which requires states to pay the federal
government 90% of the estimated amount they would have paid in drug expenses in 2006, when
drug coverage for dual eligibles will be transferred from state Medicaid programs to Medicare. In
addition, the program's Web site includes a question and answer session with Tricia Neuman, a
Kaiser Family Foundation vice president and director of its Medicare Policy Project, about the 2003
Medicare law; a Medicare resource map; and information about the new prescription drug benefit
("NOW," PBS, 7/8). The complete transcript and video of the program in RealPlayer will be
available online after the broadcast.
Pharmacists Wary Of Role In Offering Medicare Drug Benefit
An administration official and a Senate staffer told pharmacists today that they play a key role in
implementing the Medicare prescription drug benefit, but some pharmacists remain wary of the law's
effect on their profession. Mark Hayes, a senior health policy adviser for the Senate Finance
Committee, noted that the law calls for pharmacists to counsel beneficiaries about the options for
selecting drug plans and contracting with those plans to help manage patients' chronic conditions.
The 41 million Medicare beneficiaries will turn to their pharmacist for information about the new
program, Hayes said. "Every single one of them is going to walk through your door," he said during
a panel discussion. "This is an incredible opportunity for the profession." Larry Kocot, senior adviser
at the Centers for Medicare and Medicaid Services, said pharmacists will be crucial in getting
beneficiaries to sign up for the right plan -- or no plan at all, if they have insurance. "The key to
success is enrollment, and that's where pharmacists are going to be important," he said.
But some pharmacists did not appear convinced. Tom Temple, executive director of the Iowa State
Pharmacy Association, called the law a "mixed bag" that might benefit his profession in the long
term but posed challenges. Pharmacists are concerned that the new benefit is not integrated into the
rest of the Medicare program, and that the law may end up favoring mail-order pharmacy benefit
managers over traditional pharmacies. Temple also complained that the law bars the government
from negotiating with drug makers to get lower prices, leaving retail payments as the only target for
controlling drug costs. "Otherwise, we will continue to drill down on the pharmacy payments," he
said. Pharmacists also are concerned that they lack the information needed to help Medicare
beneficiaries navigate the process of enrolling in the drug program. But Kocot said more pharmacists
are becoming knowledgeable about the benefit. "We're moving in the right direction," he said.
Responding to pharmacists' concerns about legislation to legalize the importation of drugs from
other countries, Hayes predicted such a bill would pass within three years. Since importation is
already happening as consumers look for ways to save money, lawmakers should ensure that
imported drugs are safe, he said. With thousands of packages of drugs entering the country every
day, he said, "We need to make sure that only packages that come in through a legal FDA system
should be allowed." (Congressional Journal, 7 / 8)
July 8, 2005
MEDICAID: REPUBLICAN AIDE CRITICIZES FAMILIES USA REPORT
An unnamed Senate Finance Committee Republican aide on Thursday said a Families USA report
inappropriately blames the 2003 Medicare law for reductions in Medicaid coverage for dual eligibles
in some states, CQ HealthBeat reports (CQ HealthBeat, 7/7). The report, which was released
Wednesday, said that as a result of a provision in the 2003 Medicare law requiring states to
contribute to the cost of the new prescription drug benefit, some states are planning to eliminate
coverage for tens of thousands of people who are considered dually eligible for Medicare and
Medicaid. Under the 2003 law, drug coverage for dual eligibles will be transferred from state
Medicaid programs to the new Medicare benefit. The so-called "clawback" provision requires states
to pay the federal government 90% of the estimated amount they would have paid in drug expenses
in 2006, and therefore states could experience savings of 10% from their current prescription drug
spending levels for dual eligibles. However, the National Governors Association maintains that
flaws in the formula for calculating the payments mean that many states actually will lose money
under the provision. To reduce their payments to the federal government, several states plan to
eliminate or have eliminated Medicaid coverage for some dual eligibles. The study says the expected
cuts are occurring in states that expanded Medicaid coverage beyond what is federally mandated for
dual eligibles -- people who are elderly or have disabilities and have incomes up to 73% of the
poverty level.
According to the Families USA study, Florida is expected to eliminate Medicaid coverage for 77,000
beneficiaries, Mississippi will end coverage for 65,000 people and Missouri will drop 8,660 people
from Medicaid. In addition, North Carolina lawmakers are considering a proposal to eliminate
Medicaid benefits for 65,000 dual eligibles in 2006, according to the study. In response to the study,
CMS spokesperson Gary Karr said the report's findings are inaccurate, noting that no state
lawmakers are quoted as saying that language related to the provision prompted them to enact
Medicaid cuts (American Health Line, 7/7).
The Senate Finance Committee aide on Thursday also noted that Families USA attributes the loss of
Medicaid coverage in Mississippi, Florida and Missouri to the 2003 Medicare law in general, rather
than focusing on the clawback provision. "We believe the [Medicare Modernization Act] benefit far
exceeds what was being provided in the vast majority of states and certainly covers a far larger
population than is currently receiving coverage today," the aide said. He also "challenged"
the study's argument that the planned Medicaid cuts are attributable to the clawback provision itself,
adding that the percentage states will be required to pay back to the federal government ultimately
will fall from 90% to 75%, CQ HealthBeat reports. "We feel there is no argument to be made that
this is not, ultimately, a good deal for the states," the aide said, adding that "as of now, we have yet
to see any convincing evidence that any states will lose money under the clawback formula for
2006." He noted, however, that lawmakers "remain open to conversation with anyone who wants to
show us that is the case." The aide also said that Medicaid cuts are a reaction to fiscal problems that
preceded the 2003 Medicare law. "[W]e are still researching the specific states" mentioned in the
Families USA report, he said, adding, "However, we feel pretty strongly that Families USA is
missing the point. State fiscal crises are not new -- they existed before the MMA. That is why they
are looking to lessen coverage for optional populations ... not because of the claw back." One
unnamed state official agreed with the aide's statements, saying, "For all the legitimate problems that
states have with the claw back, it simply isn't the reason states are cutting back." He added, "They
are doing so for two other reasons: With a Medicare benefit, the need for the Medicaid benefit was
lessened. Reason two: state budgets. Keep in mind that these states had expanded coverage to this
population beyond what any other states had done ... and now they're being criticized for having to
pare back to the national norm?" Regardless of the impact of the 2003 Medicare law, a number of
states could consider reducing coverage for dual eligibles because that is "where the money is,"
NGA Executive Director Raymond Scheppach said. He added that NGA will lobby for a fix to the
repayment formula in the provision (CQ HealthBeat, 7/7).
MEDICAID: COSTS REMAIN PROBLEM DESPITE IMPROVED STATE REVENUES
State revenues "improved dramatically" in fiscal year 2005 -- primarily from increased sales and
income taxes -- but Medicaid costs are expected to continue increasing by 9% to 10% annually,
which could create the need for future cuts in other programs, according to a report from the
National Governors Association and the National Association of State Budget Officers released
Thursday, the New York Times reports. The report states, "In fiscal 2005, revenues exceeded
original budget projections in 42 states, and five others met their targets. Only three states' revenues
were below their budget projections" (Pear, New York Times, 7/8). However, NGA Executive
Director Ray Scheppach said, "Medicaid and health care continue to be a crisis at the state level"
(Tanner, AP/Seattle Post-Intelligencer, 7/8). Twenty-four states reported Medicaid budget shortfalls
in 2005, compared with 20 in 2004, the survey found. Enrollment increases -- averaging 8% since
FY 2000 -- played a "major role" in increased Medicaid spending, CQ HealthBeat reports. Families
and children accounted for the "greater part" of the enrollment increase, but the elderly and disabled
"accounted for a greater share of rising costs," according to CQ HealthBeat (CQ HealthBeat, 7/7).
Scheppach predicts more individuals will qualify for Medicaid in the future as fewer employers offer
health insurance coverage to workers. Federal and state spending on Medicaid now is more than
$320 billion annually, and the Congressional Budget Office expects program costs to increase by
7.8% per year -- "significantly" lower than NGA's estimate of 9% to 10%, the Times reports.
According to the Times, funding problems for programs including Medicaid might "be more
manageable with the rebound of state revenues," but "states are cautious about the fiscal outlook
over the next five or 10 years." Scheppach said it is likely that "you will see cuts in higher
education" to fill in Medicaid budget gaps unless states are given more flexibility to control costs in
the program (New York Times, 7/8). He added that it is "critical" that Congress by September adopt
NGA-endorsed Medicaid reforms, including added co-payments, asset transfer reduction,
pharmaceutical reimbursement charges and the ability for states to alter benefits. "If it doesn't
happen then, then I think it's going to be unlikely for the next couple of years," he said. Scheppach
warned that Medicaid's "tipping point ... is at the next economic downturn," noting that although
there is "a strong economy now, ... at some point it is going to slow," which could force states to
make further cuts to Medicaid coverage and benefits. Additionally, Scheppach expects governors
will look beyond Medicaid to reduce health costs and improve health care quality through measures
such as providing consumers with more data to inform their health care decisions (CQ HealthBeat,
7/7). The report is available online. Note: You must have Adobe Acrobat Reader to view the report.
Members Named To Medicaid Panel Spurned By Dems, Govs
The HHS Department announced today the selection of commission members -- mostly with close
ties to the Bush administration -- who must find ways to shave Medicaid spending and modernize
the program. The commission will come up with suggestions by Sept. 1 for ways to cut $10 billion
over five years from Medicaid as well as recommendations for long-term changes to shore up the
program that provides insurance to the poor and disabled. HHS Secretary Leavitt named former
Tennessee Gov. Don Sundquist, a Republican, as commission chairman and former Maine Gov.
Angus King, an independent, as vice chairman. Leavitt also left open two spots on the commission
for governors, though they contend that they have offered short-term recommendations for Medicaid
and do not need to participate in the commission. Governors might join the commission in its longterm
considerations after Sept. 1, HHS noted in its announcement.
The commission also is expected to include members of Congress; an HHS notice posted in May
seeking nominees said there would be eight nonvoting seats on the commission reserved for
lawmakers from both parties. An HHS spokeswoman said congressional leaders probably would
name their party's appointees to the commission, although she did not know when that would
happen. Democrats, however, have said they will not participate, complaining that a nonvoting,
advisory role was insufficient. Similarly, Sen. Gordon Smith, R-Ore., who added language to the
FY06 budget resolution creating the commission, also has said he does not want to serve. The
commission was part of a compromise to win over senators who had resisted even larger Medicaid
cuts.
Voting members include Melanie Bella, vice president for policy, Center for Health Care Strategies,
Inc.; Gail Christopher, vice president for health, women and families at the Joint Center for Political
and Economic Studies and director of the Joint Center Health Policy Institute; Gwen Gillenwater,
director for advocacy and public policy, National Council on Independent Living; Robert Helms,
resident scholar and director of health policy studies, American Enterprise Institute; Kay James,
former director of the Office of Personnel Management; Troy Justesen, deputy assistant secretary for
the office of special education and rehabilitative services, Education Department; Tony McCann,
secretary of health and mental hygiene, state of Maryland; Mike O'Grady, assistant secretary for
planning and evaluation, HHS; Bill Shiebler, former president, Deutsche Bank; and Grace-Marie
Turner, president of the Galen Institute. (National Journal, 7 / 8)
John E. Gallagher, Vice President of Government Relations 800.642.6065 ext. 6503
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