ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

SUBCOMMITTEE ON HEALTH

Johnson Announces Hearing on Implementation of the Medicare Drug Benefit

Congresswoman Nancy L. Johnson (R-CT), Chairman, Subcommittee on Health of the Committee on Ways and Means, today announced that the Subcommittee will hold a hearing on implementation of the new Medicare prescription drug benefit known as Part D.  The hearing will take place on Wednesday, May 3, 2006, in the main Committee hearing room, 1100 Longworth House Office Building, beginning at 10:00 a.m.  The hearing will recess at 12:00 p.m. and reconvene at 2:00 p.m. if necessary.

In view of the limited time available to hear witnesses, oral testimony at this hearing will be from the invited witnesses only.  Witnesses will include Centers for Medicare and Medicaid Services (CMS) Administrator Mark McClellan, a representative from the Social Security Administration (SSA), as well as representatives of groups affected by the new benefit.  However, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Committee and for inclusion in the printed record of the hearing.

BACKGROUND:

On December 8, 2003, the President signed into law the Medicare Modernization Act (P.L. 108-173) (the MMA), which created a new Part D benefit in the Medicare program to provide coverage for outpatient prescription drugs.  Prior to the law, most outpatient drugs were not covered by Medicare and many seniors who did not have prescription drug coverage through another source either individually assumed this financial burden or went without prescription drugs because of the cost.  According to CMS, starting in January 2006, millions of Medicare beneficiaries began receiving prescription drugs through the new program.  Since that time, almost a quarter of a billion prescriptions have been filled, and many seniors have availed themselves of discounts through their drug plans, and many have saved.

Under the program, beneficiaries could purchase standard coverage, alternative coverage with actuarially equivalent benefits or enhanced coverage.  In 2006, standard coverage is a $250 deductible, 25 percent coinsurance for costs between $251 and $2,250, and catastrophic coverage after out of pocket expenses of $3,600.  Once the beneficiary reaches the catastrophic limit, the program pays all costs except for nominal cost-sharing.  Low income subsidies are provided for persons with limited assets and incomes below 150 percent of the poverty level.  Coverage is provided through prescription drug plans or Medicare Advantage prescription drug (MA-PD) plans.  The program relies on private plans to provide coverage and to bear some of the financial risk for drug costs; Federal subsidies are provided to encourage participation.  Premiums are determined through a bid process and plans compete based on premiums, benefits and negotiated prices.

To date, hundreds of private insurance plans are contracting with CMS.  Accordingly, Medicare beneficiaries have a number of options to choose from, including benefit plans provided by Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs) and stand alone drug plans.  In addition, under the MMA, a 28 percent subsidy is provided to employers and unions whose plans at least equal the standard coverage for retiree drug costs between $250 and $5,000, and this is excludable from taxation.  Employers are also permitted to structure their benefits around Part D coverage and enroll retirees in Part D plans.

There are currently about 43 million Medicare beneficiaries.  Although the Part D drug benefit program is voluntary, about 27 million Medicare beneficiaries are directly benefiting as a result of this program.  The latest figures show more than 8 million Medicare beneficiaries have decided to sign up for stand alone prescription plans, up from about 3 million in January, and these numbers continue to grow.  Finally, the MMA federalized the costs of about 5.8 million “dual eligible” beneficiaries, those who are eligible for both Medicare and Medicaid.  Problems with the transition for this population were reported and continue to be by beneficiary groups, pharmacists and some States.

The Centers for Medicare and Medicaid Services have already begun the process of reaching out to private drug plans for the 2007 plan year.  It remains to be seen how beneficiaries and plans will respond to the first year of the program and the upcoming May 15 enrollment deadline.

In announcing the hearing, Subcommittee on Health Chairman Nancy Johnson stated, "Today more seniors than ever before have access to affordable prescription drug coverage through the Medicare drug plan, and more seniors are signing up every day.  The Medicare drug benefit is the biggest expansion of the program since it was created 40 years ago.  Today more than 27 million Medicare beneficiaries have drug coverage; including 8 million who have signed up for stand-alone drug plans.  During this hearing, we will examine how this significant new program is being implemented and discuss with Medicare beneficiaries, federal officials and health care providers how we can improve the drug benefit going forward."

FOCUS OF THE HEARING:

The hearing will focus on implementation of the new Part D benefit.

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

Please Note:  Any person(s) and/or organization(s) wishing to submit for the hearing record must follow the appropriate link on the hearing page of the Committee website and complete the informational forms.  From the Committee homepage, http://waysandmeans.house.gov, select “109^th Congress” from the menu entitled, “Hearing Archives” (http://waysandmeans.house.gov/Hearings.asp?congress=17).  Select the hearing for which you would like to submit, and click on the link entitled, “Click here to provide a submission for the record.”  Once you have followed the online instructions, completing all informational forms and clicking “submit” on the final page, an email will be sent to the address which you supply confirming your interest in providing a submission for the record.  You MUST REPLY to the email and ATTACH your submission as a Word or WordPerfect document, in compliance with the formatting requirements listed below, by close of business Wednesday, May 17, 2006.  Finally, please note thatdue to the change in House mail policy, the U.S. Capitol Police will refuse sealed-package deliveries to all House Office Buildings.  For questions, or if you encounter technical problems, please call (202) 225-1721.

FORMATTING REQUIREMENTS:

The Committee relies on electronic submissions for printing the official hearing record. As always, submissions will be included in the record according to the discretion of the Committee. The Committee will not alter the content of your submission, but we reserve the right to format it according to our guidelines. Any submission provided to the Committee by a witness, any supplementary materials submitted for the printed record, and any written comments in response to a request for written comments must conform to the guidelines listed below. Any submission or supplementary item not in compliance with these guidelines will not be printed, but will be maintained in the Committee files for review and use by the Committee.

1.   All submissions and supplementary materials must be provided in Word or WordPerfect format and MUST NOT exceed a total of 10 pages, including attachments.  Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official hearing record.

2.  Copies of whole documents submitted as exhibit material will not be accepted for printing.  Instead, exhibit material should be referenced and quoted or paraphrased.  All exhibit material not meeting these specifications will be maintained in the Committee files for review and use by the Committee.

3.  All submissions must include a list of all clients, persons, and/or organizations on whose behalf the witness appears.  A supplemental sheet must accompany each submission listing the name, company, address, telephone and fax numbers of each witness.

Note:  All Committee advisories and news releases are available on the World Wide Web at http://waysandmeans.house.gov.

The Committee seeks to make its facilities accessible to persons with disabilities. If you are in need of special accommodations, please call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four business days notice is requested). Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above.