Medicare Compliance & Reimbursement

House and Senate Medicare conferees have reached a "tentative agreement" on rules for prescription-drug discount cards, conference Chair Bill Thomas (R-CA) announced Aug. 5.

Thomas said "some technical drafting still needs to be completed," but "only one issue remains" regarding the cards, which are intended to provide beneficiaries with discounts during the gap between passage of legislation and the launch of a full-scale benefit in 2006. The outstanding issue is understood to be to what extent low-income beneficiaries will be required to make copayments.

If the agreement holds, it would be the second partial agreement reached by the negotiators, following a July 25 agreement on regulatory and contracting reforms. But the conferees themselves admit that they are plucking the "low-hanging fruit" first, and they will have to climb much higher to resolve issues like the benefit's delivery structure and competition between fee-for-service Medicare and private plans.

It is probably not coincidental that Thomas' announcement came one day after a story in the New York Times suggested that disagreements over the discount cards have the potential to sink the whole Medicare bill. Thomas and others who fervently back increasing the role of private plans in Medicare are determined not to lose momentum over the August recess and want to keep an aura of inevitability and inexorable progress around the enterprise.

Thomas did not lay out details of the tentative agreement, but conferees have reportedly agreed to the Senate approach of putting $600 on the cards of beneficiaries with incomes up to 135 percent of the federal poverty level. Under the House bill, those with incomes below that threshold would receive $800, while those with incomes between 135 and 150 percent of poverty would get $500.

Conferees also appear to have adopted a loose regulatory structure, for instance rejecting Senate provisions that would have limited price increases by card sponsors to once every sixty days and mandated discounts of at least 20 percent. Issuers of the cards, which could cost up to $30, would have to monitor potential adverse drug reactions but would not have to offer other medication therapy-management services.

In comments to Congress, the administration argued against imposing too many rules, stressing the need to get the program off the ground quickly and its temporary nature. However, if negotiators can't bridge the considerable differences between the House and Senate bills in other areas, the card may turn out to be the only benefit left standing and may not turn out to be so temporary after all, perhaps leading to a need to reassess its structure.

Discount cards could also take on new prominence if private plans do not step forward to deliver the drug benefit in certain markets, as some conservative GOP members of the House "rump group" have suggested might happen.