For Professionals: Advocacy & Policy

Joint Informational Hearing: Medicare Prescription Drug Coverage: Challenges of Implementation and Status of State Assistance Efforts

February 1, 2006

Testimony of David Lipschutz, California Health Advocates

INTRO

California Health Advocates is a non-profit organization dedicated to education and advocacy efforts on behalf of Medicare beneficiaries in California. One way we do this is to provide support to the state Health Insurance Counseling and Advocacy Program (HICAP) at the local level, including technical support and training. The California Department of Aging — not California Health Advocates — however, administers the HICAP program. First, I hope to convey the “big picture” of what the HICAP network is experiencing based upon our communication and support of the HICAP network; second, I will discuss potential state and federal fixes to Part D implementation problems based upon California Health Advocates' Medicare policy advocacy work (for an example of our policy work, see, e.g. copy of our issue brief entitled “Consumers Face Inadequate Protections Concerning Medicare Part D Enrollment and/or Disenrollment Problems” included in your materials).

As testimony so far has shown, the rollout of the Medicare Part D prescription drug benefit has been plagued with problems that have led to catastrophic outcomes for many Californians who have both Medicare and Medi-Cal (dual eligibles). Many dual eligibles have been forced to go without their medications or pay out of pocket for their drugs. While we applaud the state – both the Governor and the legislature – for stepping in to provide emergency coverage in face of Part D failures, it must be made clear that these problems will continue and new problems will arise.

Fixes at the federal level – both legislative and administrative – are required, but there is much that the state of California can and must do to protect its most vulnerable citizens. While the state did not create this mess, the state has an obligation to protect its citizens when the federal government fails to do so.

OVERVIEW OF PART D PROBLEMS FOR DUAL ELIGIBLES

The rollout of the Medicare Part D prescription drug benefit starting January 1, 2006 and the corresponding transition in drug coverage for those who are dually eligible for Medicare and Medi-Cal has been anything but seamless. As reported by consumers, HICAPs and other advocacy organizations providing direct services to consumers, pharmacists and the media, many dual eligibles are simply not getting their prescription drugs due to a number of problems, including:

Failure of the process auto-assigning dual eligibles into Part D plans;
Failure of the CMS' "backup" point of service system;
Failure of CMS and contractors' databases reflecting eligibility status;
Inability of consumers and pharmacists to get through to Part D plans and obtain accurate information;
Inability of 1-800-MEDICARE and Part D plan customer service representatives to provide timely, accurate information;
Failure of Part D plans and contracting pharmacies to honor transition plan "first fill" obligations;
Pharmacies charging inappropriate cost-sharing for drugs, resulting in duals being unable to pay them; and
Consumers' inability to file exceptions and appeals with Part D plans.

HICAP AND MEDICARE PART D ROLLOUT

The HICAP network – 24 offices serving every county in the state – has felt the full force of the Medicare Part D tidal wave and is doing a phenomenal job in responding to the Part D crisis by assisting their clients Despite extensive preparation, the network is struggling to meet unprecedented demand. In mid-December, the statewide network was fielding approximately 5,000 calls a day, before disaster struck in January. Some HICAPs reported a 1000% increase in call volume in January, with the majority of calls coming from dual eligibles or their families

HICAP offices are getting calls and referrals from everywhere, including Social Security offices, county welfare offices, the Department of Health Services, and 1-800-MEDICARE, the federal help line. Customer service representatives at the Medicare help line are themselves overwhelmed and inappropriately referring people to HICAP for eligibility questions and other information that can only be answered with access to federal data that HICAP does not have, but 1-800-MEDICARE does.

Not only is the volume of calls to HICAP offices extreme, but the nature and structure of the Part D benefit injects a level of complexity that requires significantly more time, effort, and expertise on behalf of each consumer. Assisting consumers with Part D appeals to get the medications they need will be even more cumbersome than other Medicare appeals, due to lack of standardization in procedure and evidence required to back up the appeal.

There have been some success stories in helping people access drugs to which they are entitled – due to the persistence and patience of HICAP and other advocates- but even with one advocate for each Medicare beneficiary we would be unable to overcome the severe design flaws of the Part D benefit. Despite the herculean efforts by the HICAPs and other advocates, no amount of money can substitute for federal legislative and regulatory changes to fix the underlying, systemic problems with Medicare Part D.

MEDICARE BENEFICIARIES WILL FACE ONGOING PROBLEMS

In part because of the structure of Medicare Part D – it relies completely on private, commercial plans to administer this benefit – we know that many problems will persist. The HICAP network and other advocates are seeing the most dire problems faced by dual eligibles right now; some of the same problems will persist for dual eligibles, and other new problems will arise for both duals and all other Medicare beneficiaries. Ongoing problems facing beneficiaries (primarily dual eligibles) include:

continuing data problems will lead to continuing gaps in coverage (approximately 10,000+ Californians will become dually eligible each month)

lag in eligibility verification by data systems
delays in CMS auto-enrollment into a Part D plan
delays in systems reflecting correct low-income subsidy (LIS) data
delay in updated data when a dual eligible changes plans

difficulty navigating the exceptions/appeals process

lack of standardization
investment of uncompensated time and effort by physicians and pharmacists
dealing with utilization management tools (e.g. prior authorization)

pharmacy access – in rural areas local pharmacies aren’t contracting with any of the benchmark plans for dual eligibles

POTENTIAL FIXES

FEDERAL LEVEL

Perhaps the most fundamental flaw of the Medicare drug benefit is that it relies entirely upon private, commercial plans to administer the benefit. In California, we have dozens of private plans competing with one another for market share. California Health Advocates believes that the structure of the Part D benefit is fundamentally unsound in that it relies solely upon private, commercial plans to deliver a vital, public, benefit. Federal legislation would be required to: restructure the entire benefit, including to allow the traditional Medicare program to administer the drug benefit; allow the Medicare program to negotiate prices with pharmaceutical companies; extend enrollment periods; and eliminate the donut hole, among other fixes.

Administrative fixes — there are things that the federal Department of Health and Human Services (DHHS) and the Centers for Medicare and Medicaid Services (CMS) can do now to help fix the problem (DHHS and CMS have recently acknowledged that they have the authority to do things that they previously said they did not). They can use authority within their discretion to impose more requirements on private, Part D plans, including:

stricter formulary requirements (require the plans to cover more drugs)
stricter transition policies (requirements, rather than recommendations, for longer “first fill” periods)
standardized forms and procedures for exceptions and appeals
accessibility standards

availability of plan-specific information (e.g. required posting of plan materials, including transition plans and exception and appeals processes on plan websites and/or CMS posting information on their website)
language access for non- and limited-English speakers
alternative formats (e.g. for individuals with limited/no sight)

enforce existing pharmacy access requirements for Part D plans, especially in rural areas, or provide alternatives (most pharmacies in outlying rural areas contract with few of the dozens of plans available in CA)

STATE LEVEL

While we applaud the state – both the Governor and the legislature – for stepping in to provide emergency coverage in the face of Part D deficiencies, the need for such coverage is more than temporary. There is much that the state can and must do to protect its most vulnerable citizens. While the state did not create this mess, the state has an obligation to protect its citizens when the federal government fails to do so. California Health Advocates' recommendations include the following:

Retain Safety Net Drug Coverage for Dual Eligibles

Despite federal assurances, the transition in drug coverage for dual eligibles from Medi-Cal to Medicare has been disastrous. While we are cautiously optimistic that CMS and plan data and systems will improve, we lack confidence that such measures will alleviate the myriad problems with the Part D system. The current emergency coverage that the state has provided – set to expire in 10 days - must be continued and made permanent to catch dual eligibles who will perpetually fall through the cracks of data systems and exchanges between the state, CMS, CMS contractors and the commercial plans. People who are becoming dually eligible for the first time will face gaps in coverage, as will duals who change plans in an attempt to find better drug coverage. In addition, dual eligibles will face a continuing need to access non-formulary drugs and may not be successful in the Part D plan’s burdensome exception and appeals processes.

Help Dual Eligibles Meet New Cost Burdens

While dual eligibles are automatically enrolled in the low-income subsidy (LIS, or “extra help”) which will cover some of their Part D expenses, they now face additional cost burdens that are out of their reach. We are already hearing reports of people unable to pay their rent, grocery and other survival costs due to these increased cost-sharing amounts.

Unlike current Medicaid rules, pharmacies will be able to deny drugs to those who cannot afford to pay the new cost-sharing requirements. The only place where dual eligibles will be exempt from these new obligations is in certain long term care facilities such as nursing homes, but not assisted living/residential care facilities for the elderly; this creates a perverse incentive towards institutionalization (and goes against the spirit of the Olmstead decision).

Help Dual Eligibles with Part D Plan Premium Assistance

Under the low-income subsidy, dual eligibles can enroll – premium-free – in plans that are average cost or below (“low-income benchmark”). Higher cost plans, however, might provide broader, more appropriate coverage for an individual’s drug needs, including coverage of “excluded” Part D drugs for which the state is currently paying. Similar to the state helping dual eligibles (until recently) with Medicare Advantage premiums, the state can pay dual eligibles’ premiums for plans above the low-income benchmark, saving the state money spent on covering both non-formulary drugs and drugs excluded under Part D.

Thank you for the opportunity to provide these comments. For more information, please contact California Health Advocates.

David Lipschutz
Staff Attorney
California Health Advocates

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