Start to Medicare Prescription Drug Program Troubled

RAY SUAREZ:

Since the new Medicare prescription drug benefit program went into effect Jan. 1, tens of thousands of seniors have encountered problems, including higher costs, red tape, and in some cases, no coverage at all.

At a Senate hearing today, Republicans and Democrats said their constituents had told them the program was filled with glitches.

North Carolina Republican Elizabeth Dole:

SEN. ELIZABETH DOLE:

However, there are some beneficiaries, in many cases the neediest among us, who are having considerable trouble transitioning into the new program. This is simply unacceptable and clearly not what was intended. It is critical that we identify these problems and work together to ensure that this new program serves each and every beneficiary successfully.

RAY SUAREZ:

New York Democrat Hillary Clinton suggested giving up on the program.

SEN. HILLARY RODHAM CLINTON:

I, for one, believe we should scrap this and start over. We are spending hundreds of billions of dollars on an inefficient delivery on a plan that could be done in a much more cost-effective way.

We have taken taxpayer dollars by the billions and transferred it to the pharmaceutical companies and the insurance companies.

RAY SUAREZ:

Medicare's top official, Mark McClellan, acknowledged the rough start.

MARK McCLELLAN:

We make no excuses for these problems. They are important, they are ours to solve, and we are finding and fixing them.

RAY SUAREZ:

Of the 43 million Americans eligible for Medicare, about 3.6 million have signed up for the new drug benefits. Another 6.2 million automatically were switched from state coverage to the federal plan, and 4.5 million more are covered through Medicare managed-care plans.

RAY SUAREZ:

Now, two perspectives on how the implementation of the drug benefit is going. Mary Grealy is president of the Healthcare Leadership Council, which is made up of executives from the healthcare industry and lobbies on their behalf; and Ron Pollack is executive director of Families USA, a nonprofit organization that advocates for healthcare consumers.

Mary Grealy, what's been the part of this design, the part of the program that people are finding toughest to implement, toughest to put into practice?

MARY GREALY:

I think the biggest challenge has been for what are called the "dual eligibles," and those are low-income seniors that are eligible both for the Medicaid program and the Medicare program. They are now being switched from getting their drug coverage under those state Medicaid programs into the new Medicare program.

And that required a lot of communication between the state and federal governments to make sure that they got involved into a plan. They were enrolled automatically, but then they were given the opportunity to switch plans if they felt one might work better for them.

And it seems to be that population, and it is a limited population, that had difficulty making that transition, switching plans and perhaps not getting into the database, so that when they went to the pharmacy, the pharmacist might not have had a record of them being enrolled in the Medicare program, or in the plan that they thought they were enrolled in.

RAY SUAREZ:

So, in effect, caught between two stools, going to the pharmacy and finding out they're not on anybody's record and not being able to get medicine?

MARY GREALY:

That was a challenge, and, again, we're talking about a small population, compared to the entire Medicare population, but a very critical population, one that needs this help. And that's why CMS and HHS are moving as quickly as possible to make sure they solve this problem.

RAY SUAREZ:

CMS is —

MARY GREALY:

I'm sorry — The Center for Medicare and Medicaid Services — Mark McClellan, who testified at the hearing today.

RAY SUAREZ:

Ron Pollack, what have you found is the part of this design that had the hardest time getting into practice, part of this program that has had a rocky start?

RON POLLACK:

I think there are a number of things, Mary is certainly right, this group, the poorest of the poor, these so-called "dual eligibles," – those who are participating in Medicare and Medicaid, that group of people used to have drug coverage through Medicaid and they lost that on Dec. 31.

A lot of those people were left out in the cold because of all of the administrative problems, but that's not the only problem.

It was interesting during the news clip, Sen. Santorum said and Mark McClellan said during the hearings, that there are 24 million people who are getting drug coverage under this program.

In point of fact, there are only 3.6 million Americans who are now getting drug coverage who didn't have it before. The other 20 some odd million were getting coverage through Medicaid, there were about 6 million people getting coverage through Medicaid, you had about 7 million people who had coverage through their previous employer, you had about 3 million getting coverage through the Veterans Administration, about 4 million who were getting it through managed care plans.

So in totality, this program has only added a little over three and a half million people, and this is for a program that cost $700 billion over ten years. But there are other problems.

RAY SUAREZ:

Well —

MARY GREALY:

Ron, I would like to respond to that.

RAY SUAREZ:

Is that a number that is bound to rise, the 3.6 million —

MARY GREALY:

That number is going to rise, so let's be clear. The money that Ron is talking about is going to subsidize those people that had coverage through their previous employers.

Many employers were dropping coverage for their retirees. The goal here is to stabilize, to make sure that those employers can continue providing that coverage, and they're receiving a significant subsidy under this program. So I don't think it fair not to count them as part of the population that is benefiting from this new Medicare prescription drug plan.

RAY SUAREZ:

These problems that both you and Ron have identified — has the administration of this proven nimble in answering some of these questions, getting people where they need to be, getting the databases right?

MARY GREALY:

This has been in place for 30 days. And I think we have to credit Secretary Leavitt with acting swiftly to correct these problems.

We've been working for many months now with the government to see how this plan is going to be implemented. When we would call problems to their attention, they have been quick to act.

We all wish it had gone perfectly from day one. But think about it: If someone signed up for a plan on Dec. 31, and then went to the drugstore the next day to have a prescription filled, perhaps their information was not transmitted quickly enough.

So I think we have to give credit where credit is due. As you heard today in the hearing, they've identified problems, and they are moving to fix those problems, working with states, working with beneficiaries, and a lot of voluntary organizations as well.

RAY SUAREZ:

Ron Pollack?

RON POLLACK:

I think there are two things to say: First of all, Mary would have us believe that this all started 30 days ago.

Yes, the program was implemented 30 days ago. This legislation was adopted more than two years ago. And so there was plenty of time to adopt this.

But the more serious problems with this program are not because the administration isn't nimble. There are structural problems with this program, and those things I don't think are going to get corrected unless there's major new changes in the legislation.

RAY SUAREZ:

Like what? Are people turning out to not be covered for the things they thought they were covered for if they need it for a chronic condition? Are there people who are, in fact, enrolled, but find that the plan they've enrolled in is not the one that meets their needs or covers the medicines — scheduled drugs they need covered?

Give me some examples of what is not working.

RON POLLACK:

I think the thing that everyone now knows is this program is immensely confusing. It is bewildering for seniors. In almost every community, they have 40 to 60 plans to choose from, and they all have different premiums and deductibles, and co-pays, and gaps in coverage, and the so-called "doughnut hole," which doesn't cover people with high drug bills; different costs of drugs; different drugs that are covered in each plan; different pharmacies you can go to.

And all of this has its basis from what the pharmaceutical lobby really wanted to achieve. Their main goal in this whole process was to make sure there would be no interference with their ability to charge high prices. And they achieved it through two means: One is the legislation prohibits Medicare from bargaining for cheaper prices like the Veterans Administration does so successfully.

But, even more so, the pharmaceutical lobby was really worried that at some point this would change. So they did not want Medicare to run this program.

Instead, we've got, you know, just numerous plans that are implementing them, and none of them have the market share to get prices down. That is what is causing this confusion.

RAY SUAREZ:

How do you respond to that critique of the design?

MARY GREALY:

Well, I would respond to Ron that we have health plans who are negotiating discounted prices on pharmaceuticals for the Medicare population, and they're doing it very effectively. There is a tough negotiator in play here.

Now, this idea that the program is way too confusing — I've actually gone out and done enrollment events with seniors. Once you sit down and put in what are their medications, what are they taking, where would they like to get their drugs, mail order or at their local pharmacy, what kind of coverage do they currently have — once you enter that information, those 40 or 50 plans are quickly narrowed down to four or five choices.

I think what is so good about this program is you can tailor a plan to fit your particular needs and get the best savings. Perhaps you don't need the full array of drugs, but you can get the best price on drugs that are suited for you, and many, many of these plans are filling that doughnut hole that would have existed if we just had had the standard plan passed by Congress.

Competition has really brought the price down and offered many very good choices for seniors.

RAY SUAREZ:

Quickly, are there fail-safes put into the program, where pharmacists supply drugs for people who need them on a very regular basis but for one bureaucratic reason or another aren't covered in that moment? Are they getting the drugs and are the pharmacists compensated?

RON POLLACK:

Many of the people have not been getting the drugs. That's why you have over half the states in the country that have intervened because there are all these problems in terms of this program.

But I have to add one very important point from what Mary said. She said you've got all these plans that are bargaining for cheaper prices. If you compared the absolute cheapest price that these private plans have been able to get from the drug companies and compare them with the prices that the Department of Veterans Affairs has gotten, you look at the top 20 drugs that seniors consume, 19 of these 20 drugs the Department of Veterans Affairs gets much cheaper prices, and the median price difference is over 48 percent.

And who's going to wind up paying the bill? Seniors are going to pay for it with higher premiums, and deductibles, and co-payments, and the American taxpayer is going to pay for it because the American taxpayer pays for 75 percent of the cost. So this is not a good deal. It could have been changed.

RAY SUAREZ:

OK. On the safety net, are people getting drugs from pharmacists when they find they're not covered?

MARY GREALY:

Secretary Leavitt has made it crystal clear — no Medicare beneficiary should leave the pharmacy without their prescription. They have stepped in, as Ron said, states have stepped in, but the Department of Health and Human Services has made it clear that they and the health plans will compensate and that every Medicare beneficiary should get their drugs. Again, that's been made crystal clear.

And they will reimburse the pharmacists; they will reimburse the states for the short-term expenditures that they're having to make. Again, it's sort of an emergency situation. We want to make sure that people get their prescriptions and they get them right away, despite computer glitches and other things, and that they're fairly compensated for doing so.

RAY SUAREZ:

By the end of the year, do you expect that figure that you cited of people, new people who are under the plan, to be higher, and will some of these problems people have signing up be taken care of? Very quickly.

RON POLLACK:

Some of these problems will be. I think these glitches with respect to the so-called "dual eligibles," the poorest of the poor, I think they will get fixed. But I think we're going to have disappointing total enrollment.

The administration originally estimated there would be 39 million people who would have coverage. Now they say it is going to be 29 million, and they've only reached 24 million, of which only 3.5 million didn't have drug coverage before. I don't think that's going to change enormously.

RAY SUAREZ:

We have to end it there. Thank you, guests.

MARY GREALY:

Thank you.