Kaiser Daily Health Policy Report
Some Senate Republicans Propose Two-Year Delay of Medicare Prescription Drug Benefit To Offset Hurricane Costs
Bipartisan Bill To Provide Medicaid Coverage for Hurricane Katrina Evacuees Delayed in Senate
Kaiser Daily Health Policy Report Highlights News Coverage of State Medicaid Developments
Senate Approves Bill To Provide Almost $2B in Emergency Funds for Department of Veterans Affairs Health Care Programs
Senate Approves $100.7B Agriculture Spending Bill Without Prescription Drug Reimportation Provision
Health Costs for Sears Retirees Expected To Rise; Those Under Age 65 To Pay Full Premium
The Latest Reports in Health Policy
Medicare Q&A Column Addresses Available Additional Assistance
Medicare
CMS Announces Companies Participating in Medicare Prescription Drug Benefit
[Sep 23, 2005]
CMS on Friday released the "first details" about which companies will be providing prescription drug coverage under the new Medicare drug benefit, AP/Yahoo! News reports. Eight insurance companies will offer coverage nationwide, while other insurers will offer coverage regionally. According to AP/Yahoo! News, beneficiaries will have at least 11 plans to choose from and those in larger states, such as New York and Texas, will have a choice of about 20 plans. The eight companies offering nationwide coverage are Aetna Life Insurance Company, Connecticut General Life Insurance Company, Memberhealth, Pacificare Life and Health Insurance Company, Silverscript Insurance Company, Unicare, United Health Care Insurance Company and Wellcare Health Plans. CMS Administrator Mark McClellan said, "The competition between these organizations has resulted in lower costs than expected. Forty-nine states will have a drug plan with a premium below $20" (Freking, AP/Yahoo! News, 9/23). The announcement comes about one week after health plans had expected the information to be released, the Boston Globe reports. More detailed information about PDPs' specific benefits cannot be released until Oct. 1, when companies are allowed to begin marketing their plans. According to the Globe, many health insurers and pharmacy benefit managers had expected CMS to release the information about which plans had been awarded contracts with Medicare earlier, and they had anticipated signing contracts with CMS by Sept. 15. Comments
"This is an indication of how disorganized this process is, and it makes me fearful about how the implementation will go," Melissa Shannon, consumer health policy coordinator of Health Care for All, said, adding, "We're getting calls today from seniors and we can't tell them anything." In addition, PDP providers say it is unclear how much information they will be able to reveal about their plans after Friday. "This timing presents a challenge because it contracts the time period during which people can be educated and enrolled," an unnamed health plan official said. Ron Pollack, executive director of Families USA, said, "Seniors across the country will be absolutely bewildered by the choices they are confronted with, and they are going to have a very difficult time navigating those choices" (Krasner, Boston Globe, 9/23).
More information about the PDPs is available online. 3M Applied for Rx Benefit Subsidies
In related news, the Social Security Administration announced on Thursday that about three million Medicare beneficiaries have submitted applications for low-income subsidies available under the drug benefit, the AP/Arizona Daily Star reports. The subsidies -- an estimated $2,100 per low-income Medicare beneficiary that will cover the cost of premiums, deductibles and some copayments -- are available to those with annual incomes of up to 150% of the federal poverty level. In addition, the value of beneficiaries' assets must be less than $11,500 for individuals and $23,000 for couples (AP/Arizona Daily Star, 9/23). In May, SSA began mailing applications for the subsidies to 19 million potentially eligible Medicare beneficiaries. So far, the agency has received three million applications, but it is unclear how many of the beneficiaries who mailed in applications will qualify for the subsidy. An estimated seven million to eight million beneficiaries ultimately could be eligible, the federal government estimates. Comments on Social Security Announcement
"We're really pleased with where we are," Commissioner of Social Security Jo Anne Barnhart said (Fahy, Pittsburgh Post-Gazette, 9/23). She added, however, that her "main message today is we're not done yet." Barnhart said SSA is continuing to review the applications and is unsure how many will be approved (AP/Arizona Daily Star, 9/23). She also said that officials are trying to contact beneficiaries who did not respond to the initial mailing, CQ HealthBeat reports. McClellan said, "This is an unprecedented initial response for a voluntary federal program for people with limited means," adding that officials expect "many" of the beneficiaries who have applied will qualify for the subsidies (CQ HealthBeat, 9/22). Some consumer advocates expressed concern that many beneficiaries might have been confused by the application and decided not to apply. Robert Hayes, president of the Medicare Rights Center, said that receiving more than three million applications "is a pretty good return rate," but he added that the "only relevant information is how many people are enrolled in the program -- how many get help." Michelle Strollo, a senior policy analyst for the Kaiser Family Foundation, said the return rate is promising, adding, "[T]here's still a long way to go" (Pittsburgh Post-Gazette, 9/23). Related Coverage
Two newspapers on Friday examined issues related to the new Medicare prescription drug benefit. Summaries appear below.
- Philadelphia Inquirer: The Inquirer examined how the new Medicare drug benefit is the "biggest expansion of a government assistance program since" the 1960s and is "also one of the most complex." Joseph Antos, a health care policy expert at the American Enterprise Institute, said, "We are performing a national experiment now. The experiment is can we get 40 million people to look at numerous drug plan options and in fairly short order decide whether they should join up with the benefit." Already, more health plans than anticipated have applied to offer benefits under the new plan, and officials are waiting to see how many beneficiaries opt for the new benefit when enrollment begins in November. Christopher Viehbacher, president of GlaxoSmithKline's U.S. pharmaceuticals division, said the program will "be a wash" for drug companies because sales increases so far appear to be offset by discounts negotiated between PDP providers and drug companies (Mondics, Philadelphia Inquirer, 9/23).
- Wall Street Journal: The Journal examined how the higher-than-expected number of PDPs will affect the new benefit. According to the Journal, most areas of the country will have between 11 and 23 PDPs competing for business, despite early concerns that few companies would choose to participate in the new benefit. In addition, because of the competition, insurers will offer premiums that are 14% lower on average than Medicare officials had predicted. While the "cut-rate prices" are "good news" for beneficiaries, they likely mean that the benefit will not be "a very profitable business" for insurers, the Journal reports. Health Net recently said it expects margins of between 2% and 3% on some of the Medicare drug benefit business, less than what some analysts and companies had predicted. However, some companies -- such as Humana and PacifiCare Health Systems, which was acquired by UnitedHealth Group, already have large Medicare networks so they will be able to "expand that business at very little cost," Joe France, an analyst at Banc of America Securities, said. As a result, companies that hope to provide stand-alone PDPs might discover "there isn't enough money to be made," possibly leading to a "shakeout" among participating companies down the road, the Journal reports (Fuhrmans, Wall Street Journal, 9/23).
Some Senate Republicans Propose Two-Year Delay of Medicare Prescription Drug Benefit To Offset Hurricane Costs
[Sep 23, 2005]
Some Senate Republicans on Thursday announced plans to release a set of proposals for offsetting spending related to recovery efforts for Hurricane Katrina, including a plan to delay by two years the implementation of the Medicare prescription drug benefit (Cohn, CongressDaily , 9/23). The action comes after the 110-member House Republican Study Committee on Wednesday released a 23-page list of proposed spending reductions to offset hurricane recovery costs that also includes a proposal to delay the launch of the new Medicare prescription drug benefit by one year. The delay is estimated to save about $30.8 billion (Kaiser Daily Health Policy Report, 9/22). Senate Republicans' Plan
The Senate Republicans' package of proposals in some ways "goes further" than those of the RSC, CongressDaily reports. For example, the senators are expected to propose delaying the Medicare drug benefit by two years instead of one for estimated savings of $85 billion. Sen. John McCain (R-Ariz.) noted that cost estimates for the drug benefit have increased by $330 billion to $730 billion over 10 years since the legislation was approved in 2003. The proposal would exempt low-income beneficiaries from the delay, CongressDaily reports. The senators also are proposing allowing domestic discretionary spending to increase by only 3.4% each year instead of 8.4% for savings of $381 billion over five years, according to CongressDaily (CongressDaily, 9/23). OMB Meeting
Office of Management and Budget Director Josh Bolten on Wednesday met with RSC leaders to discuss the group's proposals. According to CongressDaily, the meeting demonstrates "the Bush administration's concern with eroding support among conservatives because of the explosion in federal spending on [President Bush's] watch." Bush said Thursday that he will come up with suggestions for offsetting the cost of hurricane recovery once officials have a better estimate of the total expenditures (Cohn/Koffler, CongressDaily, 9/22).
Medicaid
Bipartisan Bill To Provide Medicaid Coverage for Hurricane Katrina Evacuees Delayed in Senate
[Sep 23, 2005]
A scheduled Senate floor discussion on a bipartisan bill that would provide federally funded Medicaid coverage to Hurricane Katrina survivors on Thursday was delayed until Monday, Senate Finance Committee Chair Chuck Grassley (R-Iowa) said, CongressDaily reports (Rovner/Heil, CongressDaily, 9/23). Grassley and finance committee ranking member Sen. Max Baucus (D-Mont.) on Sept. 14 introduced the bill, which would have the federal government for five months pay 100% of Medicaid costs for survivors from Louisiana, Mississippi and parts of Alabama who have relocated to other states, with the option of extending the coverage for an additional five months. The federal government also would pay 100% of Medicaid costs through the end of 2006 for all beneficiaries in Louisiana, Mississippi and counties in Alabama that have been designated as disaster areas. Other states would be assured that their federal Medicaid matching rates would not decline next year. Survivors with annual incomes below the federal poverty level would be eligible for the coverage. Pregnant women and children from families with annual incomes up to 200% of the federal poverty level also would be eligible for Medicaid. The bill would eliminate any asset tests and would measure income moving forward. More Bill Details
Further, the bill would establish a fund to help hurricane survivors with private health insurance pay their premiums and change Medicare and Medicaid laws so that survivors do not face penalties for missed application deadlines. In addition, the bill would eliminate copayments and deductibles for hospital services for elderly Medicare beneficiaries displaced by the hurricane. The bill would not delay the launch of the Medicare prescription drug benefit for dual eligibles, as requested by some lawmakers. Dual eligibles' prescription drug coverage will be transitioned from Medicaid to Medicare starting on Jan. 1, 2006, as planned. However, HHS would be required to submit by Oct. 7 a written plan for how it will accomplish the transition for dually eligible beneficiaries in states and counties affected by Hurricane Katrina (Kaiser Daily Health Policy Report, 9/22). Bill 'Abruptly Delayed'
Grassley and Baucus, who "have been trying to get the bill to the floor all week," were "thwarted by as yet unidentified Republicans who are concerned about the bill's cost," CongressDaily reports. Some also share the Bush administration's concern that expansions of Medicaid coverage to people who are ordinarily ineligible for the program would be difficult to reverse. Baucus, who estimated that the bill would cost about $8.7 billion over five years, said, "This is an emergency. This is not the time for the legislative process as usual." Grassley said, "People want more time to study it. But they'll come back with the same gripe; ... the question is: Do they want to help victims of Katrina or not?" If the bill reaches the Senate floor next week, it could be merged with a package being developed by the Senate Health, Education, Labor and Pensions Committee, CongressDaily reports. The "less contentious" HELP committee package reportedly includes assistance with health insurance premiums for those who lost their jobs because of the hurricane, help for employers, and technical changes to aid community health centers and other clinics treating survivors, according to CongressDaily (CongressDaily, 9/23). Split Between Republicans, Bush?
With some Republicans who generally support the Bush administration -- such as Mississippi Gov. Haley Barbour (R) and Sen. Trent Lott (R-Miss.) -- endorsing the Grassley-Baucus plan, there is a "growing fissure" between President Bush and other Republicans over how to care for Katrina survivors, according to the Los Angeles Times. Bush "is proving deeply reluctant to use some of the big-government tools at his disposal, apparently out of fear of permanently enlarging programs that he opposes or has sought to cut," the Times reports. According to the Times, Bush administration officials are "quietly working to derail" the Grassley-Baucus proposal and instead are pushing "a narrower plan that would not commit the government to covering certain groups of evacuees." Under the plan, hurricane survivors who traditionally would not qualify for Medicaid and who do not have other forms of insurance would have to seek no-cost care at hospital emergency departments, Bush administration officials have said. The administration "has promised to obtain more funding to compensate hospitals that provide the free care," the Times reports (Gosselin/Alonso-Zaldivar, Los Angeles Times, 9/23). Mississippi Waiver Agreement
In related news, the Bush administration announced a Medicaid waiver agreement with Mississippi that is "similar to one issued last week to Texas, providing temporary Medicaid eligibility to residents of other states," CongressDaily reports. However, a separate "memoranda of understanding" signed by federal Medicaid Director Dennis Smith and the Medicaid directors of Louisiana, Mississippi and Alabama makes clear that those states "remain responsible for the state share" for services given to displaced residents in other states. Mississippi Interim Medicaid Executive Director Bobby Moody thanked CMS Administrator Mark McClellan but added, "We think [the Grassley-Baucus bill] is very important to our recovery here" (CongressDaily, 9/23).
Kaiser Daily Health Policy Report Highlights News Coverage of State Medicaid Developments
[Sep 23, 2005]
The following summarizes recent developments related to Medicaid in New Hampshire, New York and Washington, D.C.
- New Hampshire: State Health and Human Services Commissioner John Stephen this week plans to request CMS approval to tighten Medicaid eligibility standards to prevent seniors from transferring assets to qualify, the AP/Manchester Union Leader reports. A state legislative oversight committee has approved the plan, and Gov. John Lynch (D) gave conditional approval, provided that restrictions would be loosened for "hardship cases," according to the AP/Union Leader. Stephen on Wednesday said he was "very close" to an agreement with Lynch but added that he plans to request CMS approval for the changes regardless of the outcome of negotiations with the governor. The state Legislature's Fiscal Committee must approve any plan that wins CMS approval (Love, AP/Manchester Union Leader, 9/21).
- New York: The state Department of Health this month is asking nursing homes to seek a new certification that will allow them to provide less expensive care to healthier residents, in addition to standard nursing home care, the Associated Press reports. Nursing homes in the state previously were able to attain only one type of certification, but a state law signed in January allows nursing homes to begin providing assisted-living care, which is half the cost of nursing home care. The law also allows nursing homes "to seek certification to convert beds to adult day health care programs and long-term home health care program slots," the AP reports. Nursing homes will be required to demonstrate to the health department that they can provide different levels of care (Choi, Associated Press, 9/21).
- Washington, D.C.: The HHS Office of the Inspector General has asked Washington, D.C., to refund $2.19 million to CMS because of overpayments resulting from problems with the district's Medicaid accounting system, the Washington Times reports. The HHS OIG's report said the district failed to report all overpayments to providers but did not indicate that there had been any misspending or fraud related to the overpayments. In a written response to the auditors, Associate D.C. CFO Deloras Shepherd said the overpayments had gone unreported because they were under appeal and had not been collected by providers. She added that the district has changed its practices for reporting overpayments as a result of the audit (McElhatton, Washington Times, 9/22).
Capitol Hill Watch
Senate Approves Bill To Provide Almost $2B in Emergency Funds for Department of Veterans Affairs Health Care Programs
[Sep 23, 2005]
The Senate on Thursday voted 98-0 to approve a bill (HR 2528) that would authorize $83 billion in fiscal year 2006 appropriations for military construction projects and the Department of Veterans Affairs budget, including nearly $2 billion in emergency funding for VA health care programs, CQ Today reports. The appropriations come in response to a Bush administration request to provide $3 billion to make up a VA health services budget shortfall. Combined with $1.5 billion added in July to the FY 2006 Interior-Environment appropriations bill (HR 2361), the VA appropriations bill brings the total emergency funding approved to address shortfalls in the VA health care budget to about $3.5 billion. Sen. Kay Bailey Hutchison (R-Texas) said the funds slated for health care in the latest bill might be reduced in conference to bring the total approved health care appropriations more in line with the amount the Bush administration requested (Donnelly/Brower, CQ Today, 9/22).
Senate Approves $100.7B Agriculture Spending Bill Without Prescription Drug Reimportation Provision
[Sep 23, 2005]
The Senate on Thursday passed a $100.7 billion fiscal year 2006 Agriculture spending bill (HR 2744), which would fund the U.S. Department of Agriculture, FDA, and other agencies and programs, CQ Today reports. The Senate version of the legislation does not include a provision that appears in the House bill that would prevent FDA from enforcing restrictions on reimporting less-expensive prescription drugs from other nations. Sen. David Vitter (R-La.) filed a similar provision in the Senate but did not bring it to the floor because he was concerned that the cost of implementing drug safety requirements would cost votes, he said. The Bush administration has threatened to veto the legislation if the prescription drug provision is included. The $100.3 billion House bill was passed in early June. A Senate appropriations aide said the Senate's added funding will go partly toward FDA. The Senate bill represents a more than 18% spending increase from $85.1 billion in FY 2005, according to committee figures. The Senate has named conferees to reconcile the House and Senate versions of the bill, while the House has not yet done so, CQ Today reports. Congressional aides this weekend might begin working on a conference to reconcile the two bills, House Appropriations Committee spokesperson John Scofield said. He added, "Naming conferees is just a formality" (Hunter, CQ Today, 9/22).
Health Care Marketplace
Health Costs for Sears Retirees Expected To Rise; Those Under Age 65 To Pay Full Premium
[Sep 23, 2005]
Sears Holdings on Thursday announced that starting next year, retirees younger than age 65 will have to cover the full cost of their health insurance, the Chicago Tribune reports (Yerak, Chicago Tribune, 9/23). Under the new policy, Sears at the end of the year will eliminate a health insurance subsidy for retirees younger than age 65 who retired after Jan. 1, 2000. Sears also will eliminate the subsidy for retirees younger than age 65 who retired between 1978 and 2000, but those retirees will become eligible for the subsidy when they reach age 65. In addition, Sears will eliminate the subsidy for employees ages 40 and older who decide to retire, effective immediately (Guy, Chicago Sun-Times, 9/23). About 15% of the 45,000 Sears retirees enrolled in the company health insurance plan are younger than 65, and about half of those will become eligible for the subsidy in the future. According to Sears retirees, the new policy will increase out-of-pocket health care costs for retirees younger than age 65 by about 40%. Sears said that retirees younger than age 65 will still have access to the company health insurance plan, which likely will cost less than individual health coverage (Chicago Tribune, 9/23). Those retirees will have access to health insurance "at competitive rates," Sears said, although the company declined to specify the amount of their monthly premiums (Merrick, Wall Street Journal, 9/23). Retiree health care costs accounted for about 17% of operating income in 2004, and Sears officials said that the new policy will allow the company to become more competitive (Chicago Sun-Times, 9/23). Reaction
Officials for the National Association of Retired Sears Employees said that they are "cautiously optimistic" about the new policy (Chicago Tribune, 9/23). NARSE Chair Ronald Olbrysh said, "The pre-65 people are going to struggle." He added, "The worst scenario would be if Sears said they're not covering anything, but they're not taking that approach" (Wall Street Journal, 9/23). Meanwhile, Sears officials declined to disclose the details of changes to health benefits for current employees but said that new benefits include a $30 tobacco-free credit, discounts for workers who fill prescriptions at company pharmacies and health savings accounts (Chicago Tribune, 9/23).
The Latest Reports in Health Policy
Medicare Q&A Column Addresses Available Additional Assistance
[Sep 23, 2005]
Kaiser Medicare Q&A Column, Kaiser Family Foundation/Knight Ridder Tribune News: This week's column, prepared by the Kaiser Family Foundation and distributed by Knight Ridder/Tribune, addresses a question about additional prescription drug assistance that is available for certain Medicare beneficiaries. According to the column, beneficiaries who plan to enroll in a Medicare drug plan in 2006 and have annual incomes less than about $14,400 for an individual or $19,250 per couple and less than $11,500 in assets for an individual or $23,000 per couple can qualify for additional assistance. Such beneficiaries might not have to pay the full premium or deductible and contribute a lower copayment for prescriptions (Kaiser Medicare Q&A Column, 9/23).
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