Medicare Compliance & Reimbursement

Those who chose to stay in traditional feefor- service Medicare would get only a limited drug benefit under President George Bush’s framework for reforming Medicare, and would miss out on preventive care and a cap on overall out-of-pocket expenditures that would be available to seniors and disabled people willing to join a private plan.

Indications earlier this year that the administration might propose offering no drug benefit within traditional Medicare provoked intense congressional criticism from members of both parties, particularly those representing rural areas.

Under Bush’s 12-page plan, released March 3 amidst much congressional impatience, FFS beneficiaries would get, at no extra premium, a drug discount card — which the White House estimates would save them 10-25 percent on drug costs — and a cap, at an unspecified level, on annual drug expenditures.

Low-income FFS beneficiaries would also get a $600 drug subsidy, but poorer seniors not eligible for Medicaid could face crushing drug bills if, as expected, the annual Rx spending cap was set at several thousand dollars.

Prominent Hill Republicans said Bush’s proposed FFS benefit was better than nothing but not nearly enough. “We need a universal drug benefit so seniors who want to stay in traditional Medicare get a prescription drug plan that’s just as good as those who choose a new option,” said Senate Finance Committee Chair Chuck Grassley (R-IA) March 4.

“We made a case that we needed a strong and adequate prescription drug benefit within the traditional Medicare system, and I see the President and his staff are moving in that direction,” remarked Rep. Billy Tauzin (R-LA), chair of the House Energy and Commerce Committee, after preceding Bush in addressing the American Medical Association March 4. Tauzin predicted that Commerce would expect that the FFS benefit would be “very similar, if not necessarily the same” as drug benefits available in Medicare’s private plans, and he indicated that Bush’s proposal did not meet that test.

Senate Minority Leader Tom Daschle (DSD) charged that the administration’s differential benefit still makes seniors “choose between the doctor they trust and the drugs they need.” The views expressed by Grassley, Tauzin, and Daschle could pose a problem for the administration.

Unlike earlier proposals put forth by Senate Majority Leader Bill Frist (R-TN) and Democratic centrist John Breaux (LA), the administration’s plan apparently does not envision direct competition between FFS Medicare and private plans.

Thus, to the extent that savings could be achieved through expanding commercial competition in the program — a hotly debated topic — the administration may need differential benefits to lure beneficiaries into private plans. On the other hand, the administration and some Hill Republicans, including Frist, have recently sounded bullish on achieving savings by introducing disease management into the FFS universe.