recognizes the enormity of the transition from Medicaid drug
coverage to Medicare and is working diligently to ensure the
process for beneficiaries is as quick and efficient as
Centers for Medicare and Medicaid Services
know how Oregon will successfully do this within this
Oregon Department of Human Services
of Congress deserve an early warning: On January 1, 2006, the huge
Medicare prescription drug entitlement goes into effect. Millions
of senior citizens will see major changes in their drug coverage,
regardless of their personal wishes in the matter. Moreover, recent
survey data show that more seniors disapprove of the Medicare drug
bill than approve of it. Recent survey data also show that most are
unaware of how these changes will affect them.
the renewed debate on the increased spending in the Medicare drug
is another issue: the capacity of the Medicare bureaucracy to
implement and manage the complex congressional drug program. The
issue is whether or not the Medicare bureaucracy can administer the
program without disrupting the lives of millions of senior citizens
and within the rigid requirements and tight timetables established
next several months, the bureaucracy must accomplish an enormous
number of different and difficult tasks that entail large risks to
seniors and the program itself if they are not done right. One
thing is certain: If there are glitches in the program's
implementation next year, Congress can expect angry calls and
problem is not the leadership of the Centers for Medicare and
Medicaid Services (CMS), the agency that runs the giant Medicare
program, or the civil servants who staff the agency. The problem is
Congress's insistence on central planning and detailed government
regulation as the preferred method of delivering medical goods and
services to senior citizens. Medicare administration is
outdated. It remains a highly centralized decision-making process,
burdened by a wide range of unwieldy tasks that Congress has
imposed on agency personnel. In enforcing the many provisions
of the Medicare Modernization Act of 2003 alone, the CMS has thus
far taken 210 actions, including regulatory actions and notices.
implementing just the drug provisions under Title I of the Act, the
CMS administrative tasks are formidable. They include putting in
place systems to pay providers and to track beneficiary spending;
enforcing rules and exercising oversight over drug formularies
("preferred drug lists" in health plans); determining employer
eligibility for government drug subsidies in employer plans;
working with the Social Security Administration (SSA) to target new
drug subsidies to low-income beneficiaries; and enrolling
beneficiaries who are eligible for both Medicare and Medicaid
(dual-eligible beneficiaries or "dual-eligibles") in the new drug
program in coordination with state officials.
remainder of the year, the CMS must accept the Medicare Advantage
plan bids for Part D benefit, continue mass mailings to millions of
Medicare beneficiaries who are deemed eligible for federal drug
subsidies, conduct a "drug claims training" program for Medicare
providers, approve the private plans' drug benefit packages, hold
forums and conferences on enrollment and payment, mail
information to seniors on the 2006 Medicare costs and benefits,
oversee the marketing of plans to seniors who will enroll in the
Medicare drug program, and oversee "open enrollment" of millions of
seniors in the program before the entitlement begins on
January 1, 2006.
has provided CMS officials with $1 billion to implement the
Time Frame. In
January 2005, the CMS issued 1,162 pages of final regulations
governing the administration of the Medicare drug
entitlement. This massive regulatory output is the
culmination of months of preliminary work conducted throughout
2004 to implement Congress's latest, and perhaps most ambitious,
experiment in government central planning.
drug entitlement is to go into effect on January 1, 2006, seniors
are scheduled to receive educational information from the CMS on
October 15, 2005. Seniors can start to enroll in the new Medicare
drug program on November 15, 2005. Seniors who have drug coverage
through Medicaid must enroll by January 1, 2006. The enrollment
period for all other seniors ends on May 15, 2006. Any senior who
misses the May 15 deadline must pay a late enrollment penalty.
Meanwhile, the amount of administrative and regulatory work yet to
be completed is staggering.
Problems. Over the
next few months, Members of Congress, seniors, and taxpayers will
have an opportunity to see how well the federal government
regulates the financing and delivery of prescription drugs. In a
program of this size, one can expect a variety of administrative
glitches, but the most serious problems, rooted in the Medicare law
itself, are already surfacing:
Drug Coverage. Millions
of seniors will end up in the congressionally designed "doughnut
hole" next year and will be paying 100 percent of their drug costs
until they spend a total of $3,600 and then qualify for
catastrophic protection. The Kaiser Family Foundation
estimates that roughly 6.9 million seniors will end up in the
doughnut hole in 2006. A recent Heritage Foundation analysis
using Congressional Budget Office (CBO) data shows that the
growth in the number of Medicare beneficiaries entering the
doughnut hole will increase steadily each month, peaking toward the
end of the year. Recent research also shows that many of
those who end up in the doughnut hole the longest will be among the
sickest and most vulnerable seniors and that, without
assistance, many will not take their medicines. Meanwhile,
plan contractors will have to track seniors "true out-of-pocket
spending," under CMS supervision, and track it accurately. If they
do not, Congress will be sure to hear from angry
Existing Private Coverage. While the
federal government will end up purchasing 60 percent of all drugs
sold in America, millions of seniors will see a loss or degradation
of existing drug coverage. The CBO estimates that 2.7 million
seniors will be moved out of their existing employer-based coverage
into the new Medicare drug program in 2006. An estimate
published by The New York Times puts that figure at 3.8
million. Because of litigation pursued by the American Association
of Retired Persons (AARP), which claims to represent senior
citizens, the actual number could be even higher. Regardless
of first-year estimates, the new law contains powerful incentives
to accelerate the movement of seniors out of existing private
coverage into the taxpayer-subsidized prescription drug
Cost Shifting to Seniors and Taxpayers. Because
of the way that Congress drafted the Medicare drug provisions, many
large employers will be able to get approximately $71 billion worth
of taxpayer subsidies for the costs of providing the drug coverage
to retirees over the next 10 years, even if they shift more of the
total cost onto retirees. As a result, many seniors will be paying
more out of pocket for an inferior drug benefit while employers
collect new taxpayer subsidies. This, too, will ensure that
Congress gets angry calls and letters next year.
of Existing Drug Coverage for the Poor. For 6.4
million seniors on Medicaid, their drug coverage ends on January 1,
2006. While Congress advertises the drug program as voluntary,
these beneficiaries have no personal choice in the matter.
Preliminary inquiries reveal that these beneficiaries see no reason
why they should be forced to change their existing drug coverage
even though they are "deemed eligible" for generous subsidies. At
the same time, state Medicaid officials, by their own account, face
serious practical difficulties in meeting the congressionally
imposed deadlines for enrolling millions of these very poor
seniors-including those in nursing homes- in the new Medicare drug
Bureaucracy and Red Tape. Before
enactment of the Medicare Modernization Act, total CMS staff
numbered 4,500. However, the new law is increasing the
size of the Medicare bureaucracy and broadening its regulatory
reach. The CMS says it will need to add at least 500 new employees
to administer the drug benefit, and the regulatory output
has been massive. The final drug regulations alone amount to more
than 1,000 pages.
Policy. The right
focus of a Medicare drug program should be help for low-income
seniors without drug coverage. While the new Medicare law achieves
that laudable goal, it goes well beyond it. Three-quarters of
seniors already have some form of drug coverage, so creating a
universal entitlement is unnecessary. Short of outright
repeal, Congress could at least delay the drug entitlement and
avoid the massive cost and disruption guaranteed by its
implementation. To this end, Representative Jeff Flake (R-AZ) has
proposed the Prescription Drug COST (Control Overspending to Save
Taxpayers) Containment Act of 2005 (H.R. 1382). The bill would
delay the onset of the drug entitlement for one year, retain
Medicaid drug coverage for the dual-eligible beneficiaries in
2006 under current terms and conditions, and continue to provide
the Medicare drug discount card and subsidies for low-income
persons for another year.
of a year or longer would not only save tens of billions of dollars
in the first year alone, but also enable Congress to take the time
to fashion a rational and responsible drug benefit and determine
precisely how the taxpayers and seniors will finance it. Meanwhile,
Congress can still target generous help to seniors who do not have
drug coverage or who need direct help in purchasing drug
Expanded CMS Regulatory Role
Centers for Medicare and Medicaid Services, the agency that has
responsibility for the Medicare program, has the main
responsibility for administering and managing the drug
entitlement. A key byproduct of the Medicare Modernization Act of
2003 has been the quantum leap in the power of the Medicare
officials, there is a complicating factor in managing the Medicare
drug benefit. The new Medicare prescription drug benefit, created
under Medicare Part D, has no analogue in the private sector.
In sharp contrast with practice in the private sector, where drug
benefits are integrated into a single insurance package, the
Medicare drug benefit is a separate benefit with separate premiums,
deductibles, and coinsurance requirements. It is also an odd
and complicated benefit, with congressionally prescribed gaps
in coverage, even though it is to be delivered by heavily
regulated private plans.
Medicare's final rules, the drug benefit can be offered by the new
Medicare Advantage plans (also scheduled to go into effect in
January 2006), the new prescription drug plans (PDPs), or special
government "fallback" plans if there is an insufficiency of
Medicare Advantage or PDP plans in a given geographical region. The
CMS has designated 34 regions for prescription drug plans.
Benefit Design. In
creating the new Medicare Part D, Congress established a
complex standardized benefit with deliberate gaps and an
entitlement financing arrangement that broadly resembles the
arrangement under the Medicare Part B benefit, which pays for
physicians' services. Writing recently in Health Affairs,
analysts noted that there are "no plans in the market today with
similar benefit designs."
in 2006, seniors will pay an estimated monthly premium of $37, a
$250 deductible, and a coinsurance payment of 25 percent up to the
first-year limit of $2,250. These amounts will be indexed to the
annual estimated costs of the benefit. This is why the
projected annual cost of the drug entitlement is of such vital
importance to seniors enrolled in the program. Meanwhile, the
government will pay an estimated 75 percent of the cost of the
benefit, drawn from general revenues, up to the annual dollar
annual amount ($2,250 in 2006), the senior will pay all annual
out-of-pocket costs for drugs between $2,250 and $5,100. This is
the notorious "doughnut hole," which an estimated 25 percent of
participating seniors are expected to reach in 2006.
Catastrophic coverage for drug costs kicks in when the senior's
total out-of-pocket costs reach $3,600 in 2006 dollars.
Complicating cost calculation in the doughnut hole and the
oversight of those costs is that some beneficiary
payments, or payments on behalf of beneficiaries, will count
as "true" out-of-pocket payments and others will not. (See Text
doughnut hole will affect millions of seniors in 2006. According to
a recent Heritage Foundation analysis based on CBO data, the
number of seniors falling into the doughnut hole will grow
progressively during the year and peak toward the end of the year,
and the process will repeat itself the following year.
Recent research published in Health Affairs also indicates
that seniors with chronic conditions will have a particularly
difficult time when they fall into the doughnut hole:
our findings the standard Part D benefit structure will exact a
disproportionate toll on people with diabetes, chronic lung
problems and mental illness in the form of both higher
out-of-pocket costs and reduced use of medications compared with
beneficiaries with average drug spending.
appears to be one of the new Medicare law's unintended
for Poor Seniors. The
Medicare drug benefit also comes with a rich body of federal
subsidies for low-income seniors. Persons with annual incomes
below 135 percent of the official federal poverty line ($12,920 for
an individual and $17,321 for a couple) will pay no premium and no
deductible, and they will experience no gap in coverage. Such
persons will be fully subsidized for catastrophic drug costs, and
co-payments for drugs will be limited to $5 for brand names
and $2 for generics.
with incomes between 135 and 150 percent of the official
poverty line ($14,355 for an individual and $19,245 for a
couple) will pay only a $50 annual deductible and benefit from a
sliding scale of premium subsidies up to an estimated $37 per month
in 2006. Such persons will pay a coinsurance of 15 percent and
also experience no gaps in coverage. Persons who are now dually
eligible under Medicare and Medicaid will also receive federal
subsidies for their drug coverage. Altogether, the CMS estimates
that 14.4 million persons- roughly a third of the estimated
Medicare population-will be able to secure these generous
federal subsidies in 2006.
Administrative Challenge. Because
the new drug entitlement is a complex, legislatively defined
benefit, its efficient administration will present the CMS with
major managerial challenges. Over the next few months, the CMS will
have to make numerous decisions in enforcing the provisions and
requirements of the Medicare drug entitlement while educating
plans, providers, employers, state officials, and millions of
Medicare beneficiaries on the components of the benefit, including
their eligibility for additional federal subsidies.
participation in the Medicare drug discount card, set to
expire on January 1, 2006, eligibility for drug subsidies
under the entitlement includes an asset test as well as an income
determination. While the dual-eligible beneficiaries are
"deemed eligible" for generous subsidies, the other designated
classes of low-income seniors must apply for them. They can apply
either through the Social Security Administration or through a
state's Medicaid office. As noted, seniors will qualify for drug
subsidies by having an annual income that is below $14,355 for a
single person ($19,245 for a couple). In determining a senior's
income, Social Security officials will count the income of the
senior or the senior's spouse, but not the income of other family
members or persons living in the household, or welfare payments
such as food stamps, home energy assistance, or housing
Security officials must also determine the assets of individuals to
qualify them for the new federal subsidies. Under the asset test, a
senior must have assets that are valued below $10,000 ($20,000 for
a couple). Under the new Medicare law, assets do not include a
senior's house, car, furniture, or rental property that a
senior would rely upon for financial support. They do, however,
include such items as bank accounts, stocks, bonds, mutual funds,
individual retirement accounts, real estate that is not a primary
residence, or any cash at home or deposited elsewhere.
According to recent research sponsored by the Kaiser Family
Foundation, the law's asset test will still disqualify almost 2.4
million low-income seniors- disproportionately widows-from
receiving drug subsidies. This appears to be yet another
unintended consequence of the new Medicare law.
concert with the asset test, federal officials will also have to
coordinate provision of the drug subsidies for low-income
programs with welfare assistance from federal programs. As
noted, welfare assistance will not be included in the income test
for drug subsidies. Nonetheless, provision of the new drug
subsidies will require a reduction of a Medicare beneficiary's
housing and food stamp assistance, although CMS officials are quick
to point out that the value of the drug subsidies will offset the
reduction in these other welfare benefits. In any case, this
process will entail a high degree of interagency
with the Social Security Administration, CMS has already begun
mailing the expected 20 million application forms to
low-income seniors who might qualify for the different levels of
federal subsidies. However, seniors will have to respond to
inquiries about the value of their life insurance and monetary
support received from friends and relatives to help pay for food,
shelter, and utilities and to affirm the truthfulness of their
responses under penalty of perjury. This could be another
formidable challenge. Historically, the response rate to official
mailings to low-income seniors has been low. With respect to those
eligible for special assistance programs in Medicare alone, 13
percent have enrolled in the Specified Low Income Medicare
Beneficiary Program (SLMB); 25 percent have taken advantage of
the subsidies in the Medicare drug discount card program; and
33 percent have availed themselves of the Qualified Medicare
Beneficiary (QMB) program.
implemented, the drug provisions' impact on seniors will be mixed.
Seniors who do not have drug coverage today will benefit greatly
from major reductions in their out-of-pocket spending. While most
seniors will see a reduction in out-of-pocket expenses and the drug
bills of poor seniors will be heavily subsidized, seniors with more
generous employment-based coverage will generally be worse off, and
seniors with Medicaid drug coverage, regardless of their
personal preferences, will lose that coverage.
plans will enroll and deliver the drug benefit. However, to enforce
the provisions of the new law, the CMS must oversee the calculation
of Medicare beneficiaries' true out-of-pocket drug spending. Under
the new Medicare law, each Medicare beneficiary's
out-of-pocket payment is capped at $3,600 per year, at which point
the catastrophic coverage threshold is met.
Medicare drug plans, under CMS supervision, must keep track of
the true out-of-pocket spending. This spending includes spending on
the deductible, cost of the coinsurance, spending in the doughnut
hole, and any amounts paid in cost-sharing subsidies on behalf
of low-income seniors who benefit from state-based wraparound
programs or federal subsidies. The qualified spending does not
include any spending by any senior for any drug that is not
included in a drug plan's formulary. Complicating this process
for seniors is that, under the new Medicare law, drug plans can
change the drugs that are on their formularies, or preferred drug
lists, with 30 days' notice.
complicating the CMS's managerial task is that many seniors
themselves are confused, skeptical, or hostile to the upcoming
congressional drug program. According to the April 2005 Kaiser
Health Poll Report, only 21 percent of seniors have a favorable
impression of the Medicare prescription drug benefit, 34
percent have an unfavorable impression, and 45 percent
are either neutral or do not know.
to an earlier Kaiser Family Foundation survey, 55 percent of
Americans age 65 and older said that they understood the Medicare
law "not too well" or "not well at all," and 59 percent said that
they did not have enough information about the Medicare law to
understand how it will affect them personally. Only 25 percent
favored the Medicare law, 42 percent opposed it, and 33
percent declared that they were neutral or did not know what
to think about it. Seniors' skepticism about the Medicare
drug entitlement, as expressed in various surveys, has been a
routine feature of the continuing debate on the Medicare law since
on Medicare's Troubled Managerial Legacy
the Medicare bureaucracy has been plagued by serious problems of
management and governance. Congress has not only ignored these
problems, but also has aggravated them by expanding
the agency's already formidable regulatory reach. Furthermore, this
regulatory expansion has been accompanied by even more intense
congressional micromanagement of the agency's
management of the complex drug entitlement is consuming an
enormous amount of CMS officials' time and energy. The agency staff
is also tasked with administering the new Medicare Advantage
system, the system of private health plans that must also be up and
running by January 1, 2006. These new administrative
responsibilities are in addition to the already existing and
updated CMS responsibilities for managing the traditional Medicare
program: Medicare Part A, which pays hospitals, and Medicare Part
B, which reimburses doctors for the services to senior and disabled
citizens. Indeed, most of the complex provisions of the
Medicare Modernization Act focus on legislative adjustments and
modifications to the traditional Medicare program. However, under
the Medicare Modernization Act, most doctors and hospital
officials will see little change in how they do business with
Medicare on a day-to-day basis.
Medicare, CMS officials are also responsible for overseeing
Medicaid, the joint federal-state health program for the poor and
the indigent, and the State Children's Health Insurance Program and
for enforcing certain provisions of the Health Insurance
Portability and Accountability Act.
the late 1990s, a chief goal of Medicare reformers was a major
transformation in Medicare's governance and a substantial
reduction of bureaucracy and red tape in the program.
The most prominent model of reform was the indisputably superior
Federal Employees Health Benefits Program (FEHBP), which has long
been characterized by light, and targeted regulation,
administrative efficiency, and minimal bureaucracy.
enacting the Medicare Modernization Act of 2003, Congress
repudiated this key goal. In effect, Congress authorized a dramatic
increase in the level of Medicare regulation, particularly by
expanding the Medicare bureaucracy's power over financing the
delivery of prescription drugs.
result of the entitlement expansion, the federal government
will purchase roughly 60 percent of all drugs bought within the
United States, and a growing body of federal rules will govern the
delivery of an ever-larger proportion of prescription drugs.
This, in turn, will guarantee even greater congressional
micromanagement of the provision of prescription drugs
while intensifying the growing pressure in Congress to impose some
form of price control regime on pharmaceuticals.
of Employers Under Medicare
on January 1, 2006, the Medicare prescription drug entitlement
will crowd out millions of seniors' existing drug coverage,
including employer-based coverage. According to original CBO
projections in 2003, only $70 billion of the estimated $407
billion in 10-year drug spending in the new Medicare law will
be new spending that would not have occurred without enactment of
the Medicare Modernization Act of 2003. In other words, the
bulk of the first decade of spending ($337 billion) will
simply be a massive replacement of existing drug spending
by new federal spending.
estimated $71 billion in tax-free federal subsidies over 10
years will be available to employers if they offer drug coverage
that is at least as generous as the Medicare drug benefit. This
special federal subsidy is to cover 28 percent of the cost of the
drug coverage between $250 and $5,000 per worker. In 2006, the
maximum subsidy will be $1,330 per retiree, and the CMS estimates
that the average subsidy payment per retiree will be $668.
Under the final rule, employer group health plans will qualify,
including "account-based plans" that come under ERISA jurisdiction,
such as health savings account and health reimbursement account
participate and secure the subsidy, employers must meet the
regulatory criteria recently spelled out in the final Medicare
rules. Under Section 423.884 of the final rule, employers must
attest that their plans are actuarially equivalent, notify
their retirees that they have creditable coverage, maintain
employer records for government auditing purposes, and submit an
application for the subsidy as prescribed by the CMS with the
relevant retiree information no later than September 30, 2005.
Furthermore, the retiree health plan contracted by the employer
must disclose retiree information to the CMS.
policy issue for employers will often be based on their calculation
as to whether they want to continue to provide retiree drug
coverage and secure the additional subsidy for continuing the
coverage, scale back the coverage to the level prescribed by
Medicare's rules, or drop coverage altogether.
has already issued guidance on actuarial equivalence
methodology and actuarial methods so that firms can determine
whether or not they can maintain or craft drug benefits that
qualify for the federal government's tax-free subsidies.
This spring, the CMS issued further guidance and instructions on
how participating employers can attest to the actuarial standards
spelled out by the government and how to submit data and
payments. Medicare officials acknowledge that
making these calculations could be "enormously complicated."
in the Rules. There is,
however, a wrinkle in the final Medicare rules. The calculation of
the new taxpayer subsidy to a company is to be based on the total
expenditures for drugs by both employers and retirees. In short,
this means that employers could conceivably shift more and more of
the benefit cost onto the retiree in the form of increased
out-of-pocket payment requirements and that the employer could
still get the 28 percent taxpayer subsidy. Whether or not this is
an unintended consequence of the law is unclear.
to a report in The Wall Street Journal, Mark Hamelburg,
director for the CMS "employer policy and operations group,"
conceded that the Medicare final rules allowed for this cost
shifting onto retirees as a way to secure the employer
agency had no choice, he said, because the way of calculating
subsidies was specified in the law passed by Congress. The agency
rejected proposals by retiree advocates to calculate the subsidy on
employers' actual expenditures alone.
to the U.S. Government Accountability Office, the percent of
employers offering retiree coverage has declined steadily since the
early 1990s. This trend leveled off in 2001 and remained stable
through 2004. Implementation of the Medicare drug
benefit, with powerful new incentives to shift costs to taxpayers,
will introduce a new dynamic into calculations by the nation's
estimated 11.8 million retirees have employer-based drug
coverage. However, independent analysts,
including Heritage Foundation analysts and others, predict that
many employers will either scale back coverage or drop it
altogether-some immediately, the rest over the next several
years-because of the new Medicare drug benefit. For 2006, the CBO
has estimated that approximately 2.7 million retirees will be moved
out of their private employer-based coverage into the government
drug program. Another estimate for 2006, based on
government documents, indicates that as many as 3.8 million seniors
could find their drug benefits reduced or eliminated altogether.
retirees, this process is already underway. For example, on
August 3, 2004, ArvinMeritor, a firm based in Troy, Michigan,
notified its retirees that effective January 1, 2006, in response
to the new Medicare law, the health care coverage provided by
the company to supplement Medicare benefits would be dropped,
including the prescription drug benefits. Likewise, the
Delphi Corporation, the world's largest supplier of auto
parts, recently announced that it will drop health benefits for
4,000 current retirees and all future retirees once retirees are
eligible for Medicare benefits, including prescription drugs. The
Delphi cutback will save the company an estimated $500 million, but
retirees will end up paying more for medical services.
complicating the future of retirees' employment-based drug coverage
is recent litigation pursued by the AARP. The AARP recently won a
federal district court case (AARP et al. v. Equal Employment
Opportunity Commission) in which the court ruled that the EEOC
may not exempt employers from the Age Discrimination in Employment
Act when they cut back on health insurance benefits for retirees as
they become eligible for Medicare. Because they cannot make a
legal distinction between retirees in health care coverage,
employers will likely-as the federal court frankly
acknowledged-reduce or eliminate health benefits for all company
retirees, regardless of age. "As a result of this
ruling," Ed Lorenzen, a senior analyst with Centrist.Org, a
politically "moderate" think tank, has emphasized, "employers will
be faced with an all or nothing decision: assume the potential cost
of providing health benefits to all retirees, whether Medicare
eligible or not; or don't provide coverage to any early
retirees." The EEOC announced that it would appeal
case, regardless of this or any other litigation, or even the
January 1, 2006, changes, the displacement of employment-based drug
coverage by the government drug program will increase with the
passage of time. According to a PricewaterhouseCoopers study
conducted for the AARP, "The retirement of the baby boom generation
will put significant stress on retiree health plans, which will
cause general coverage to drop over the long-term."
on the States
state officials are responsible for administering the bulk of
the Medicaid program, the nation's largest health insurance
program, which covers approximately 46 million poor and indigent
citizens. Under the Medicare Modernization Act of 2003, state
officials, working with the CMS and SSA, are to help enroll the 6.4
million Medicaid dual-eligible beneficiaries in the new drug
Section 423.904 of the final rule, state officials are to
determine eligibility of these beneficiaries for the purpose of
securing federal subsidies for them; to screen individuals who
apply for the Part D subsidies; to provide them with information,
assistance, and application forms for low-income
subsidies; to require them or their representatives to
complete the appropriate forms; and to provide the CMS with any
other relevant information that the CMS may require to implement
the Part D benefit.
part, CMS officials are working overtime with state officials
and other public and private agencies to ensure that plan drug
formularies are appropriate and that there are no gaps in drug
coverage for this population. They are working with state officials
to secure data on these beneficiaries, to prepare outreach
efforts for them, to educate them on their options under the
new Medicare drug program, and to provide them with forms, detailed
information, and points of contact.
the transition, in the fall of 2005, the CMS ruled that members of
this senior population will automatically be enrolled in randomly
selected Medicare drug plans but will have an opportunity to choose
another plan during 2006. Moreover, the CMS has pledged to ensure
that these beneficiaries will get access to all "medically
necessary" treatments based on "best practices" in providing drug
benefits for seniors and people with disabilities, to establish a
coverage and appeals process for beneficiaries, and to appoint a
Medicare beneficiary ombudsman to secure the right of seniors to
their drug benefits.
difficulties confronting CMS and state officials are
compounded by the special characteristics and health status of this
population. The dual-eligibles are among the oldest and
sickest of the Medicaid population. Not only are many of them
mentally and physically handicapped, but almost 25 percent are also
in nursing homes. Among the Medicaid population, these
beneficiaries have the highest reliance on prescription drugs,
accounting for 52 percent of total drug expenditures.
officials, interviewed by analysts for the Kaiser Family
Foundation, also found that the characteristics of the population
will complicate their tasks:
transition can prove difficult, the Medicaid officials noted [that]
the movement of dual eligibles to Medicare is likely to be
particularly hard given their low income, cognitive limitations,
and other health issues that characterize the dual-eligible
Choice. While the
congressional authors of the drug entitlement routinely describe it
as a "voluntary" benefit, that description is inaccurate.
Third-party payment systems often frustrate personal choice,
and that is certainly the case for the Medicaid dual-eligibles.
These are also the only seniors who cannot under any circumstances
keep their existing drug coverage under the Medicaid program,
regardless of their personal wishes in the matter. A recent, though
limited, Kaiser Family Foundation analysis found strong opposition
among these beneficiaries to any change at all:
they are very satisfied with their current drug coverage under
Medicaid, their initial reactions are negative. They want to know
who wants them to change and why. Many simply deny that changes
will occur or hope that they will be unaffected by Medicare changes
because they have Medicaid.
federal subsidies for this population are generous. Beginning
in 2006, federal subsidies for this population under the Medicare
drug program will be equally generous. Dual-eligibles with
incomes under 100 percent of the federal poverty level ($9,570 for
an individual and $12,830 for a couple) pay no premium, and their
co-payments for drugs are limited to $1 for a generic drug and $3
for a brand-name drug. Those over 100 percent of the federal
poverty level will still pay no premium and no more than $2 for a
generic drug and $5 for a brand-name drug. A recent
PricewaterhouseCoopers analysis indicates that out-of-pocket
spending on drugs by this population will remain constant.
Today, Medicaid insurance pays 95 percent of their drug costs, and
their payments under the Medicare Modernization Act will remain
roughly the same.
staff, state officials are under enormous pressure. They must carry
out a variety of difficult tasks in order to transfer this
population from Medicaid to Medicare. They must not only learn
the provisions of the new Medicare law, but also correctly
identify the dual-eligible population and confirm their eligibility
for subsidies or extra assistance, update their information
technology systems, revise state rules and regulations governing
care for this population, revamp anti-fraud efforts to cope with
the new program, work with providers and health care institutions,
and help to enroll the dual-eligibles in the new Medicare drug
the Clock. While all
other seniors have until May 15, 2006, to enroll in the Medicare
prescription drug program, the dual-eligibles must enroll in
the new program by January 1, 2006, because Medicaid funding for
their drug coverage ends that day. Since enrollment in the drug
plan does not begin until November 15, 2005, this imposes a very
tight time frame on millions of senior and disabled citizens.
As remarked by Richard Jensen, an independent health policy
consultant, "To avoid gaps in coverage, this means that over six
million dual-eligibles must be enrolled in the new Medicare drug
plans and begin using them for coverage just six weeks after they
Medicaid officials, interviewed by Kaiser Family Foundation
analysts, expressed nearly unanimous disapproval of the tight
time frames within which they must operate. According to analysts
with the California Health Care Foundation, the Medicare drug
program's impact will be felt "throughout the California health
care system," but state lawmakers and officials will nonetheless be
forced to make important decisions "in the absence of perfect
information." Likewise, in their survey of state
officials, the Kaiser Family Foundation analysts report:
the term "disaster" to describe the ambitious time table and the
likely outcome of its implementation. They noted that detailed
information on the private plans is scheduled to become available
in the fall of 2005, leaving as little as a month or two to enroll
dual eligibles before their Medicaid drug coverage ends on January
analysts also see the timetable problem both as universal for
officials in all the states and as a bipartisan concern.
Disruption. Under the
new Medicare law, state officials must help dual-eligibles make the
transition to the new Medicare program and help them to pick a drug
plan by January 1, 2006. If these beneficiaries do not or cannot
pick a drug plan, they can be randomly assigned to a drug plan in
assignment and automatic enrollment are designed to smooth
dual-eligibles' transition into the Medicare drug program, but as
Jensen notes, even automatic enrollment will not avoid dangerous
Kitchin, director of the Oregon Department of Human Services, told
the Senate Special Committee on Aging that random assignment
by itself will not guarantee a smooth transition, because "it will
maximize the chances that a beneficiary is enrolled in a plan that
does not meet their needs."
Gaps in Coverage. In the
transition from Medicaid to Medicare, a major concern is that
beneficiaries may choose or be randomly assigned to drug plans that
do not include the precise drugs that they need. CMS officials are
keenly aware of the problem, and Medicare drug plans must offer
these beneficiaries formularies that are "equivalent" to Medicaid
formularies. Moreover, CMS Administrator Mark
McClellan has indicated that his agency will allow doctors to write
90-day prescriptions for this population in December, when
their Medicaid coverage ends, helping to ease their transition
into the Medicare program during the first three months of 2006.
problems are more difficult. In some cases, for example, the
Medicare law specifically disallows certain classes of drugs, such
as benzodiazepines, which are used for the treatment of
anxiety disorders. If Medicare drug plans do not include the
drugs that the dual-eligibles have been using under the Medicaid
program, then dual-eligible beneficiaries must resort to the
Medicare appeals process. For beneficiaries taking these and
other prescription drugs as maintenance therapies, this could
be both time-consuming and frustrating. It could also adversely
affect their care.
state Medicaid officials have expressed deep concern over potential
gaps in drug coverage and formulary restrictions. According to
Kaiser Family Foundation analysts, "Prescription drug coverage is
so important for this group that Medicaid officials were
concerned that any slip up, however small, could be a major
issue." Because this population and its subgroups
are so heavily dependent on prescription medications, gaps in
coverage or the inability to secure the same drugs in Medicare
that they depended on in Medicaid could jeopardize their
health and, depending on their condition, even their lives.
if the dual-eligibles are assigned to low-cost plans, they are more
likely to be enrolled in plans with greater formulary restrictions.
Dr. Carl Clark, chief executive officer of the Mental Health Center
of Denver, Colorado, observes that the problems of coverage gaps
could be particularly serious for those who are mentally disabled
and who are randomly assigned to health plans without the
appropriate drug coverage, noting that the instruction for them to
re-enroll in a plan that includes their specific medication
regimens will be difficult to follow in practice. Dr. Clark
stated that dual eligibles with severe mental illnesses who are
randomly assigned to plans that don't reflect their current
medication regimens can re-enroll into PDPs that do. Based upon my
years of clinical experience with this population, I have very
serious doubts about this approach.
states also have pharmacy assistance programs to help needy
seniors with drug coverage and to help pay for drugs. Under the
Medicare drug bill, the states could use these existing programs to
"wrap around" the standard Medicare Part D coverage for low-income
seniors who may need the extra assistance to secure a richer
drug benefits package. In principle, plans participating in the
Medicare drug program could offer a richer benefit package than the
legislatively required standard drug benefit. However, under the
tight congressional time frames for the transition, state officials
are concerned that they would not know exactly how to supplement
the Medicare drug coverage for these beneficiaries:
Medicaid Director put it: "How are we going to deal with the issues
to wrap around benefits, when nobody will know what Medicare will
cover until October 15th of next year-two and one half months
before we implement?"
obviously did not anticipate problems with this process.
Congress Can Still Do
of Congress will soon be getting a continuing education in
detailed central planning. As in all cases of central planning,
there will be major and minor miscalculations. The planners either
will make miscalculations themselves or will dutifully carry
out the miscalculations that Congress itself enacted into law.
Regrettably, the consequences-intended or not-will directly
affect millions of seniors and taxpayers.
roughly three-quarters of seniors already have drug coverage, the
displacement of existing private and public spending is
unnecessary, as is the attempt to compensate for this displacement
through an administratively complex government program. A rational
and responsible policy would simply target assistance to seniors
without drug coverage, particularly low-income seniors who do not
qualify for Medicaid.
repeal, Congress can at least delay the onset of the universal
entitlement and give itself a chance to craft a sensible, simpler,
and targeted drug benefit, guaranteeing drug coverage to low-income
seniors or seniors without coverage. Beyond that, Congress can take
the time to conclude the unfinished debate over the future
financing of Medicare, including ways to control the growing
unfunded liabilities that will burden current and future
taxpayers. A judicious delay would also give a welcome reprieve to
state Medicaid officials, millions of dual-eligible
beneficiaries, and seniors in existing private plans.
case, however, seniors on Medicaid should be free to choose to
enroll in the Medicare program for their drug coverage. Congress
should not coerce them.
effect a delay, Representative Flake has introduced the
Prescription Drug COST Containment Act of 2005. The bill would
delay the Medicare drug entitlement for one year and would continue
the Medicare drug discount card program, its "transitional
assistance" or subsidies to low-income seniors, and Medicaid
coverage of prescription drugs for those now covered under the
fixing the drug benefit, Congress can restart work on the
unfinished task of reforming the entire Medicare program. It can
build on the best features of the Medicare Advantage program and
the Medicare drug discount card program and create a new
system for the next generation of retirees.
Medicare system should be the product of a comprehensive structural
reform, changing the financing of the program from a complex
defined benefit to a more simplified defined contribution,
establishing means testing for government contributions to
seniors' health care, and replacing its outdated system of
bureaucracy and red tape with a new regulatory regime that closely
resembles the superior system that governs the FEHBP, the health
care program for current and retired federal employees and their
In a new
Medicare system, drug coverage would be fully integrated into the
benefits packages of health insurance plans, and beneficiaries
would be allowed to pay one premium for one plan with one set of
co-payments and deductibles. Personal choice-for all classes of
Medicare beneficiaries- would characterize the new
has launched the largest entitlement expansion since the Great
Society, accompanied by an equally massive new experiment in
central planning. This will have enormous consequences, not
only for taxpayers who must finance a large and growing Medicare
debt, but also for millions of seniors, as the Medicare bureaucracy
tries to administer a complex drug benefit through
increasingly detailed rules, regulations, and guidelines. This
will be a vast regulatory enterprise.
Medicare bureaucracy will struggle to manage this program
within the tight time frame established under the new law.
Next year, millions of seniors currently without drug coverage will
be provided with coverage-especially low-income seniors, who will
be heavily subsidized. However, millions of other seniors will lose
their existing drug coverage, have their existing coverage
degraded, or find themselves struggling with congressionally
engineered gaps in drug coverage. Many who find themselves in these
gaps will be among the sickest and most vulnerable members of the
Medicare law will also displace existing private and public
spending on drugs. For seniors with coverage through Medicaid,
enrollment in the new Medicare program is not a matter of choice,
and state Medicaid officials have no option but to manage a very
difficult task the best they can within a limited amount of time.
Meanwhile, taxpayers will be spending billions of dollars more to
encourage employers to retain drug coverage for retirees, even
as the law allows those employers to lower the level of drug
coverage for their retirees while still receiving taxpayer
subsidies. Given its powerful incentives, regardless of the outcome
of court litigation on the subject, the new Medicare law will
accelerate the loss of private employment-based retiree drug
complex Medicare drug benefit, with its strange gaps in coverage,
is a creation of the congressional imagination. It is not a
free-market model. It does not reflect current market reality; it
displaces it. By enacting it, Congress has repudiated one of the
key goals of Medicare reform: reducing bureaucracy and red tape.
Instead, Congress has dramatically expanded the power of the
Medicare bureaucracy and massively increased red tape, inviting
ever more counterproductive and costly congressional
micromanagement of the program.
Congress reverses course and repeals or at least delays it, the
Medicare drug entitlement will go into effect on January 1, 2006,
and another major portion of the health care sector of the
American economy will come under direct government
E. Moffit, Ph.D., is Director of the Center for
Health Policy Studies at The Heritage Foundation.
McClellan, M.D., Ph.D., Director, Centers for Medicare and Medicaid
Services, "The Transition of Full Benefit Dual Eligible
Beneficiaries to the Medicare Prescription Drug Benefit," testimony
before the Special Committee on Aging, U.S. Senate, March 3,
Kitchin, Director, Oregon Department of Human Services, testimony
before the Special Committee on Aging, U.S. Senate, March 3,
Bush Administration released its upwardly revised 10-year cost of
the Medicare drug benefit-$724 billion for the period from 2006 to
2015-the revelation set off an angry response in Congress,
including renewed calls for congressional investigations.
Worsening the Medicare outlook is the growth in long-term estimates
of the program's unfunded liabilities by $2 trillion in just
one year. See Derek Hunter, "Medicare Drug Cost Estimates: What
Congress Knows Now," Heritage Foundation Backgrounder No.
1849, April 28, 2005, at
been a recurrent issue in the Medicare drug debate. See Robert E.
Moffit, "Congress Should Think Twice About Allowing the Medicare
Bureaucracy to Manage a Drug Benefit," Heritage Foundation
Backgrounder No. 1583, September 9, 2002, at
Centers for Medicare and Medicaid Services, "Medicare Modernization
Update: Regulations and Notices," at
brief overview of these key regulatory tasks, see Robert E. Moffit,
"Early Warning on Medicare Drug Implementation," Heritage
Foundation WebMemo No. 631, January 4, 2005.
Connolly, "Millions to Be Automatically Enrolled in Medicare Drug
Plan," The Washington Post, January 22, 2005, p.
for Medicare and Medicaid Services, "General Information:
Prescription Drug Benefit/Medicare Advantage Programs," Web
site, modified May 27, 2005, at
www.cms.hhs.gov/medicarereform/pdbma/general.asp (June 1,
published the final rule governing the provisions of Title I of the
Medicare Modernization Act of 2003 (Public Law 108-173) on January
28, 2005; see 70 Federal Register 4194. For an excellent
summary of the Final Rule governing the Medicare drug entitlement,
see Health Policy Alternatives, "Prescription Drug Coverage for
Medicare Beneficiaries: Summary of the Final Rule to Implement the
Medicare Prescription Drug Benefit," prepared for the Henry J.
Kaiser Family Foundation, February 10, 2005, at
www.kff.org/medicare/upload/51141_1.pdf (May 31,
Mays, Monica Brenner, Tricia Neuman, Juliette Cubanski, and Gary
Claxton,"Estimates of Medicare Beneficiaries' Out-of-Pocket Drug
Spending in 2006: Modeling the Impact of the MMA," Henry J. Kaiser
Family Foundation, November 2004, p. iv, at
(May 31, 2005). The Kaiser analysts accept the Congressional
Budget Office assumption that 29 million out of an estimated 42.6
million Medicare beneficiaries will be enrolled in the Medicare
drug program in 2006.
F. Haislmaier, "Weird Science: Projecting the Effects of Medicare's
Odd Benefit Design," Heritage Foundation WebMemo No.
674, March 3, 2005, at
www.heritage.org/Research/HealthCare/wm674.cfm. See also
Deroy Murdoch, "Lyposuction Needed," National Review Online,
March 3, 2005.
includes central office and regional office staff. For an overview
of CMS budget, operations, and staffing, see Centers for Medicare
and Medicaid Services, "The CMS Chart Series," modified September
16, 2004, at www.cms.hhs.gov/charts/ series (May 31,
Barr, "Hundreds Have Been Hired to Provide New Medicare Drug
Benefit," The Washington Post, April 6, 2005, p.
release, "HHS Announces Regions to Administer New Medicare
Prescription Drug Benefit and Medicare Advantage Program," Centers
for Medicare and Medicaid Services, December 6, 2004, at
www.hhs.gov/news/press/2004pres/ 20041206.html (June 1,
Stuart, Linda Simoni-Wastila, and Danielle Chauncey, "Assessing the
Impact of Coverage Gaps in the Medicare Part D Drug Benefit,"
Health Affairs Web Exclusive, April 19, 2005, p.
example, the CBO estimates that by 2013, the Medicare beneficiary's
annual drug deductible will reach $445 and the out-of-pocket
threshold will be $6,400. See Jack Rodgers and John Stell, The
Medicare Prescription Drug Benefit: Potential Impact on
Beneficiaries (Washington, D.C.: AARP Public Policy Institute,
November 2004), p. 5.
et al., "Estimates of Medicare Beneficiaries' Out-of-Pocket
Drug Spending in 2006," p. iv.
"Weird Science," pp. 2-4.
et al., "Assessing the Impact of Coverage Gaps in the
Medicare Part D Drug Benefit," p. W5-175.
"The Transition of Full Benefit Dual Eligible Beneficiaries to the
Medicare Prescription Drug Benefit," p. 4.
Security Administration, "Getting Help with Medicare Prescription
Drug Plan Costs: Income and Resource Limits," SSA Publication No.
05-10115, May, 2005.
Security officials say that asset values can be slightly higher (an
additional $1,500 per person), and a senior would still meet the
asset test for the drug subsidies, if those resources were used for
Rice and Katherine Desmond, "Low Income Subsidies for the Medicare
Prescription Drug Benefit: The Impact of the Asset Test," Henry J.
Kaiser Family Foundation, April 2005, executive summary, p.
for Medicare and Medicaid Services, "Medicare Prescription Drug
Coverage and Other Federal Means-Tested Programs," Tip
Sheet, May 25, 2005.
Pear, "Medicare Applications Sent to Low-Income Americans," The
New York Times, March 29, 2005, p. A13.
presented by James Firman, Chairman of the Access to Benefits
Coalition and President of the National Council on the Aging, at a
"Policy Workshop on Low Income Subsidies and the Medicare Drug
Benefit," sponsored by the Henry J. Kaiser Family Foundation,
Washington , D.C., June 8, 2005. According to his data, seniors'
take-up rates have been higher for the Supplemental Security Income
program (53 percent); Medicaid (60 percent); and the earned income
tax credit (68 percent).
McTaggart, "State Implications of the Medicare Modernization Act:
Part D Pharmacy," presentation at the Women in Government
Conference, Tucson, Arizona, December 2004.
Kaiser Family Foundation, "Current Views of Medicare Prescription
Drug Law," Kaiser Health Poll Report, March/ April 2005, at
www.kff.org/healthpollreport/apr_2005/3.cfm (June 1,
Kaiser Family Foundation, "Selected Findings on the Medicare Drug
Law," Health Poll Report Survey, January 2005, at
www.kff.org/kaiserpolls/upload/50510_1.pdf (June 1, 2005).
The poll was conducted by Princeton Survey Research Associates
International between December 2 and December 4, 2004, among a
nationally representative sample of 1,203 Americans ages 18 and
older, including 237 adults age 65 and older.
point, see Michael E. Gluck and Richard Sorian, Administrative
Challenges in Managing the Medicare Program (Washington,
D.C.: AARP Public Policy Institute, 2004). See also U.S. General
Accounting Office (since renamed Government Accountability Office),
Medicare Management: CMS Faces Challenges to Sustain Progress
and Address Weaknesses, GAO-01-817, July 2001, at
www.gao.gov/new.items/d01817.pdf (May 31, 2005); Kathleen M.
King, Sheila Burke, and Elizabeth Docteur, eds, Matching
Problems with Solutions: Improving Medicare's Governance and
Management (Washington, D.C.: National Academy of Social
Insurance, 2002); and Robert E. Moffit, "Transcending Medicare's
Regulatory Regime," testimony before the Subcommittee on
Health, Committee on Ways and Means, U.S. House of Representatives,
March 15, 2001, at www.heritage.org/
Thomas H. Stanton, "The Administration of Medicare: A Neglected
Issue," The Washington and Lee Law Review, Vol. 60, No. 4
(Fall 2003), pp. 1373-1416.
complete Medicare reform proposal, outlined by the majority of the
National Bipartisan Commission on the Future of Medicare in 1999,
included an ambitious prescription for transforming the governance
and financing of Medicare. The majority proposed creating a
"premium support" system governed by an independent board. The
board, independent of the civil service, would operate in a
fashion similar to the administrative team at the U.S. Office of
Personnel Management (OPM), the agency that governs the Federal
Employees Health Benefits Program (FEHBP). The federal employees'
program covers more than 8 million persons, including retirees,
with a minimum of bureaucracy and regulation. In the FEHBP,
OPM's limited number of regulations focus largely on enforcing
basic benefit requirements, consumer protection, and health plan
solvency; for example, no rigid benefit standardization, price
controls, or agency rules govern private plans' drug formularies.
Approximately 160 employees administer the entire
point, see Stuart M. Butler, "Restructuring Medicare for the Next
Century," testimonybefore the Committee on Finance, U.S. Senate,
June 16, 1999, at
Walton Francis, "The FEHBP as a Model for Medicare Reform:
Separating Fact from Fiction," Heritage Foundation
Backgrounder No. 1674, August 7, 2003, at
Vernon, Rexford Santerre, and Carmelo Giacotto, "Are Drug Price
Controls Good for Your Health," Manhattan Institute, Center
for Medical Progress, Medical Progress Report No. 1,
December 2004, at www.manhattan-institute.org/pdf/
mpr_01.pdf (May 31, 2005).
recent congressional flare-up over Medicare's coverage of Viagra, a
drug to treat impotence, is a harbinger of future controversies.
The congressional effort to ban Viagra is only the first instance
of Members of Congress intervening to reverse Medicare's
administrative decisions or to prescribe what drugs will or will
not be available to seniors under the universal drug
entitlement. This kind of controversy is simply unavoidable under a
defined-benefit entitlement. Seniors and taxpayers have gotten
their first glimpse into the political micromanagement that will
characterize the administration of the Medicare drug
and Stell, The Medicare Prescription Drug Benefit: Potential
Impact on Beneficiaries, p. ES2.
Pear, "Employers Can Get Medicare Subsidies for Lower Benefits,"
The New York Times, January 31, 2005, p. A1.
Policy Alternatives, "Prescription Drug Coverage for Medicare
Beneficiaries," p. 91 (Section 423.882).
for Medicare and Medicaid Services, "Employer Policy and Operations
Group: Timeline for Future Guidance Regarding Employer and Union
Sponsored Plans," January 2005.
"Employers Can Get Medicare Subsidies for Lower
Francis and Ellen E. Schultz, "Rules Let Firms Get Subsidy for
Retirees' Drug Costs," The Wall Street Journal, January 28,
2005, p. A4.
Government Accountability Office, Retiree Health Benefits:
Options for Employment-Based Prescription Drug Benefits Under the
Medicare Modernization Act, GAO-05-205, February 2005, p. 4, at
www.gao.gov/new.items/d05205.pdf (May 31, 2005).
and Stell, The Medicare Prescription Drug Benefit, p.
example, see Edmund F. Haislmaier, "How Congress's Medicare Drug
Provisions Would Reduce Seniors' Existing Private Coverage,"
Heritage Foundation Backgrounder No. 1668, July 17, 2003, at
and Stell, The Medicare Prescription Drug Benefit, p.
Pear, "Medicare Law Is Seen Leading to Cuts in Drug Benefits for
Retirees," The New York Times, July 14, 2004, p.
to ArvinMeitor retirees from Richard D. Greb, Senior Director of
Benefits, ArvinMeitor, August 3, 2004.
Clanton, "Delphi to Cut Retiree Benefits," The Detroit News,
March 8, 2004.
B. Crenshaw, "Retiree Benefits Can't Be Cut at 65, Judge Says,"
The Washington Post, March 31, 2005, p. E6.
Lorenzen, "AARP 'Victory' in Court Would Reduce Retiree Health
Benefits," Centrists.Org, March 31, 2005, at
and Stell, The Medicare Prescription Drug Benefit, p.
Policy Alternatives, "Prescription Drug Coverage for Medicare
Beneficiaries," p. 99.
"The Transition of Full Benefit Dual Eligible Beneficiaries to the
Medicare Prescription Drug Benefit," p. 7.
10-15. There are five levels of appeals in the new Medicare
coverage and appeals process.
Jensen, "The New Medicare Prescription Drug Law: Issues for
Enrolling Dual Eligibles into Drug Plans," Kaiser Commission on
Medicaid and the Uninsured, Henry J. Kaiser Family Foundation,
January 2005, p. 1.
"State Implications of the Medicare Modernization Act."
Smith, Kathleen Gifford, and Sandy Kramer, "Implications of the
Medicare Modernization Act for States: Observations from a
Focus Group Discussion with Medicaid Directors," Kaiser Commission
on Medicaid and the Uninsured, Henry J. Kaiser Family Foundation,
January 2005, p. 2, at
(June 1, 2005).
Perry, Michelle Kitchman, and Jocelyn Guyer, "Medicare's New
Prescription Drug Benefit: The Voice of People Dually Covered by
Medicare and Medicaid," Henry J. Kaiser Family Foundation, January
2005, p. 9. The Kaiser survey of these beneficiaries was based on
five focus groups in November and December 2004.
"State Implications of the Medicare Modernization Act." The poverty
level referenced here is in 2005 dollars.
and Stell, The Medicare Prescription Drug Benefit, p.
"The New Medicare Prescription Drug Law," p. 2.
White, Jonathan Blum, and Ryan Padrez, "The Medicare Drug Benefit:
Implications for California," California Health Care Foundation
Issue Brief, April 2005, p. 11.
et al. "Implications of the Medicare Modernization Act for
States," pp. 2-3.
"State Implications of the Medicare Modernization Act."
"The New Medicare Prescription Drug Law," p. 2.
Rovner, "Senate Panel Told of Dual Eligible Drug Transition
Worries," Congress Daily, March 4, 2005, p. 11.
"The New Medicare Prescription Drug Law," p. 3.
J. Milligan, Jr., "Impact of the Medicare Prescription Drug Benefit
on Home- and Community-Based Services Waiver Programs,"
Commonwealth Fund Issue Brief, April 2005, p. 4.
Rovner, "Dually Concerned," Congress Daily, April 7, 2005,
1.7 million dual eligibles are currently taking benzodiazepines,
including 12 percent of nursing home residents. See Wendy
Gerlach, "The Long Term Care Pharmacy Alliance," testimony before
the Special Committee on Aging, U.S. Senate, March 3, 2005, p.
et al., "Implications of the Medicare Modernization Act for
the States," p. 10.
Ibid., p. 8.
See also Milligan, "Impact of the Medicare Prescription Drug
Benefit on Home- and Community-Based Services Waiver
"Senate Panel Told of Dual Eligible Transition Worries," p.
Clark, M.D., Chief Executive Officer, Mental Health Center of
Denver, testimony before the Special Committee on Aging, U.S.
Senate, March 3, 2005, p. 3.
et al., "Implications of the Medicare Modernization Act for
the States," p. 12.
detailed description of how this approach would work, see Walton J.
Francis, "Using the Federal Employees' Model