Washington Health Policy Week in Review

Washington Health Policy Week in Review is a weekly newsletter that offers selected stories from the daily newsletter CQ HealthBeat.

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Democrats Focus Ire over Medicare Drug Benefit on Leavitt, McClellan

FEBRUARY 8, 2006 -- Even as President Bush has proposed wringing $35.9 billion in savings from Medicare over the next five years, Democrats at a hearing Wednesday assailed administration officials over the launch of the new Medicare prescription drug benefit.

Health and Human Services Secretary Michael O. Leavitt appeared before the Ways and Means Committee to discuss the president's $698 billion fiscal 2007 budget for his department.

But, with months in front of them to complain about Bush's budget, Democrats focused their attention Wednesday on the more immediate opportunity to grill Leavitt on start-up problems with the drug plan (PL 108-173).

Rep. Benjamin L. Cardin, D-Md., asked Leavitt to support legislation he plans to introduce that would add more drugs to the formularies drug plans cover. He said a constituent had lost coverage for one of her drugs when she moved from Medicaid to a Medicare plan. Leavitt said Medicare could work with patients on a case-by-case basis, but that the formulary approach—which limits coverage to a limited list of drugs for specific conditions—was chosen as most efficient and cost-effective.

Leavitt recounted steps the administration has taken to alleviate problems some seniors have had in getting prescriptions filled under the new program. And he reminded lawmakers that HHS has promised to reimburse states for costs they incurred helping low-income beneficiaries get drugs they needed when their Medicare coverage did not kick in on time.

That did not satisfy panel Democrats, who requested an extension of the Feb. 15 deadline states must meet to apply for reimbursements.

Pete Stark, D-Calif., also warned Leavitt that he would be monitoring the prices of prescription drugs as the program continues, since insurers can change prices and formularies at any time but beneficiaries can change plans only once a year.

Meanwhile, Mark McClellan, administrator of the Centers for Medicare and Medicaid Services, was on the other side of Capitol Hill, appearing before the Senate Finance Committee to answer questions about the Medicare drug benefit.

Repeatedly prodded and interrupted by Max Baucus of Montana, the panel's ranking Democrat, McClellan told the committee his agency was working to fix the problems that have marred the start-up of the benefit.

But when asked if he would have the problems under control by March or April, McClellan hedged a bit, refusing to be pinned down.

McClellan also would not bite when pressed by senators to endorse a variety of legislative changes in the program, including a delay in the deadline for seniors to sign up for the drug benefit, steps to standardize Medicare drug plans to simplify comparative shopping, and a provision to bar insurance plans from dropping a drug from their formularies during the same year a beneficiary enrolls.

"I think Congress is going to change the enrollment period for you," said Sen. Ron Wyden, D-Ore.

Baucus told McClellan the administration has implemented the benefit "poorly," discouraging seniors from signing up by "paralyzing" them with choices.

Baucus said he will introduce legislation allowing "apples-to-apples" comparison of plans. McClellan said the administration will act on its own to make comparisons easier without elaborating on how it will do so.

Bush Budget Proposals
During discussion of Bush's new budget, Ways and Means Republicans praised proposals to shift health care toward a market-oriented approach through innovations such as tax-free health savings accounts (HSAs), which seek to drive down health costs by making consumers more aware of the costs of the treatment.

Paul D. Ryan, R-Wis., noted that about one-third of people who had signed up for HSAs had been previously uninsured. "HSAs have become a good pool for people with higher risk profiles," he said.

But Ryan said there is not enough information available to consumers about health care prices to allow them to make fully informed decisions in choosing doctors, hospitals, and other providers.

Leavitt said that as the use of health information technology and quality data reporting increases—as called for in Bush's budget—consumers would be able to make better choices.

Ranking Democrat Charles B. Rangel of New York criticized Bush's proposals to shift costs to consumers. "HSAs move the risk from the employer to the employee," with no guarantee of cost savings, he said.

Leavitt replied, "I think economists have been very clear that creating cost-conscious consumers will drive down the cost of health care."