Senators Levin, Stabenow Introduce Bill to Resolve Problems With New Medicare Prescription Drug Benefit

WASHINGTON – In response to the concerns of seniors across Michigan, Senators Carl Levin and Debbie Stabenow (both D-MI) are introducing legislation today, the Medicare Part D Reform Act of 2006, to address some of the major problems in the Medicare prescription drug plan that took effect on January 1.

“It is just a month into the new Medicare prescription drug benefit, and it is a disaster for millions of seniors,” Levin said. “There are more than a few bugs that need to be worked out. Beneficiaries are confused, and many seniors have less coverage today than they had before the bill. The insurance and pharmaceutical industries have been the principal beneficiaries, not seniors. My legislation would help make Medicare Part D more equitable and efficient.”

“The confusion and incompetence we have seen in the implementation of the Medicare Prescription Drug program has put the health of millions of Americans at risk,” said Stabenow. “These aren’t just issues of bureaucracy and inconvenience – when it comes to seniors getting the medicine they need it can be a matter of life and death. I have heard from seniors all across Michigan about the problems with this new benefit, and this legislation will help fix the problems.”

The Medicare Part D Reform Act of 2006 contains the following provisions:

• Restore seniors to discount programs who have been arbitrarily and precipitously cut off.

  Prior to the enactment of Medicare Part D, some pharmaceutical companies offered lower income individuals prescription drug assistance through Patient Assistance Programs or PAPs. PAPs assist seniors who have income up to 200 percent of the federal poverty level ($19,600 for a single person or $26,400 for a couple). However, the new Part D benefit provides assistance to individuals only up to 150 percent of the federal poverty level ($14,700 for a single person or $19,800 for a couple).

  Therefore, large numbers of seniors with incomes between $14,700 and $26,400 will have major new expenditures for prescription drugs. Under Medicare Part D, some pharmaceutical companies are now offering both PAPs and Prescription Drug Plans. The Department of Health and Human Services (HHS) recently advised pharmaceutical companies that they could not use PAPs as inducements for low income beneficiaries to sign up for those companies’ Prescription Drug Plans, with the result being that many companies have terminated the discount drug card. This provision would clarify that pharmaceutical Patient Assistance Programs are allowed to continue as before.

  The provision would also clarify that the PAP discount does not count as a contribution towards out-of-pocket costs, which otherwise would get seniors more quickly to the point where prescription drug coverage stops, the so-called “doughnut hole,” before starting up again.

• Prescription Drug Plans (PDPs) will not be permitted to remove drugs from the plan’s list of covered drugs until January 1 of the following year.

  Currently, Prescription Drug Plans (PDPs) can drop coverage of any medication from their formulary at any time during the calendar year, even seniors may have relied upon the medication being available and covered when choosing that particular plan. This provision would require PDPs to continue to offer all drugs in their formulary for the entire year. If a PDP chooses to discontinue a medication, it must give notice between September 1 and October 15 that it will no longer cover that medication beginning the following January. This change will ensure that seniors will know in a timely manner if their provider plans to drop a medication that they rely on, so they can choose another plan during open enrollment season from November 15 – December 31. Plans will continue to be allowed to add prescription drugs to their formulary at any time.

• Waive co-payments for “dual eligibles” who cannot afford them.

  Former Medicaid recipients have been involuntarily moved into the Medicare prescription drug program. The result has been an increase in co-pays and, unlike the Medicaid program, no possible waiver of those co-pays.

• Strike the “Non-Interference Clause” from Part D.

  Current law bars the Department of Health and Human Services from using its bargaining power to negotiate lower prescription drug prices with pharmaceutical companies. This legislation would remove that prohibition, which would allow the federal government to save money by negotiating bulk discount pricing.

If you are a senior and have questions about Medicare, please visit Senator Levin's Medicare page.