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Medicare Discount Cards on Track



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WASHINGTON, Mar 09, 2004 (United Press International via COMTEX) -- The Medicare prescription drug discount card program is right on track toward a June rollout and the Centers for Medicare and Medicaid Services intends to ensure a smooth launch with no complaints.

The prescription drug benefit is a political issue in this election year as much as a policy one. Democrats wasted no time attacking the Republican-backed Medicare reform law signed last December, but the criticisms lacked a big kick because the true drug program, and subsequent changes to privatize the senior health entitlement program, do not begin until 2006.

Republicans softened the law's controversy over allowing drug reimportation from Canada by creating a task force to investigate safety and efficacy issues. So, really, the only immediate Democratic target in the new law during political campaigning this summer and fall would be a poorly launched, badly run or confusing discount drug card with seniors complaining from coast to coast.

"We are on target and moving very aggressively," acting CMS administrator Dennis Smith told the U.S. Senate Special Committee on Aging Tuesday. "We are being diligent about implementation."

Twice as many potential card sponsors -- more than 100 pharmacy benefit management companies, drug stores, health insurers and others -- have applied to CMS for permission to market a discount card to seniors. The cards will carry a $30 annual fee and then provide what CMS has estimated will be prescription drug discounts of around 10 percent to 25 percent in some cases. Low-income seniors also will get an extra $600 on the top to use for drug purchases.

Smith said the approved list of sponsors will be released in April. In May, they can begin marketing their cards to Medicare beneficiaries. The program begins in June.

About 24 percent of Medicare recipients -- out of some 42 million -- do not have any prescription drug coverage and those who do are asked to compare their benefits to the new program. The typical senior without drug coverage spends about $1,400 each year on medication.

Sen. Larry Craig, R-Idaho, committee chairman, said the key priorities are ensuring seniors get the information they need to understand and navigate the program, ensuring discounts are fair and straight forward and seeing that CMS acts aggressively to "combat fraud and weed out sponsors not offering true value."

"There are reports out already that there may be some gaming going on," Craig told Smith.

"We are pursuing a couple of different leads of behavior that may indeed be fraudulent and again we have really a coordinated activity with the Department of Justice, as well as our own Inspector General, to pursue those leads and in fact we will be doing that," Smith replied.

Smith said CMS will monitor drug card sponsors for any bait and switch deals "to make sure that those discounts that are offered are real."

He said many companies that want to sponsor a drug discount card also are interested in getting into the full Medicare drug program in 2006, so they are "planning for the future -- so they have every incentive to do it right ... The last thing you want to do is mess up between now and then."

CMS has authority to impose sanctions on discount card program violators, including banning them from the program.

Smith said competition among card sponsors, coupled with planning for the future, will provide additional incentives for sponsors to negotiate the best deals with drug manufacturers and others to offer seniors.

He said sponsors will have information on plan specifics, what data they can ask seniors to provide, as well as the timing and content of their marketing.

A multi-pronged education and advertisement program also is ready, including having the government send mailings to every senior explaining the program and urging them to sign up. The CMS 1-800-Medicare toll-free help line is being expanded in anticipation of a doubling of annual calls to more than 12 million. Medicare also is working with the state discount drug programs and local and regional senior groups to educate people about the program -- especially to reach low-income seniors eligible for the additional $600.

Done right, the program could be even more effective than CMS envisions, said James Firman, chief executive officer for the National Council on the Aging.

"The actual savings to the low-income are going to be far more generous than most people realize," he said.

Firman said pharmaceutical companies and state programs that offer discount programs will wrap them around the Medicare card -- helping seniors even more. He used as an example an 82-year-old man in Idaho who does not have drug coverage. The man has $10,000 of income and $20,000 in assets and does not qualify for Medicaid. He spend $5,500 on prescription drugs each year. As a result of the state and drug-maker program wrap-arounds in Idaho, he would actually spend just $460 on drugs through the Medicare program -- a savings of more than $5,000 per year.

Craig Fuller, CEO of the National Association of Chain Drug Stores, which hopes to sponsor a card in conjunction with the big PBM Express Scripts, agreed the savings would be higher than CMS estimates.

"We also believe that any price discounts, rebates and concessions that card sponsors are able to negotiate from manufacturers and pharmacies should be passed through to the beneficiary, so that beneficiaries can achieve the maximum savings on their prescription drugs," he said.

PBMs in the past, however, have been reluctant to quantify the total discounts they receive and the percentage that is passed on to customers.

"... the experience of drug discount cards in the private sector indicates that in some instances seniors may well benefit from even steeper discounts - in some cases as much as 50 percent less than what they otherwise would have paid," said Mark Merritt, CEO of the Pharmaceutical Care Management Association, the lobby organization for PBMs. "A key challenge before policymakers in implementing both the drug discount program and the full Part D benefit lies in preserving the ability of PBMs and other entities to negotiate maximum savings for beneficiaries."

Craig said it appeared CMS was on the right track with the drug card program but, even still, "We (lawmakers) will watch you very closely."

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Ellen Beck covers healthcare policy for UPI Science News. E-mail ebeck@upi.com

Copyright 2004 by United Press International.

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