<DOC>
[109 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:21036.wais]
S. Hrg. 109-36
IMPLEMENTATION OF THE MEDICARE
MODERNIZATION ACT: DELIVERING PRESCRIPTION DRUGS TO DUAL ELIGIBLES
=======================================================================
HEARING
before the
SPECIAL COMMITTEE ON AGING
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
__________
WASHINGTON, DC
__________
MARCH 3, 2005
__________
Serial No. 109-3
Printed for the use of the Special Committee on Aging
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SPECIAL COMMITTEE ON AGING
GORDON SMITH, Oregon, Chairman
RICHARD SHELBY, Alabama HERB KOHL, Wisconsin
SUSAN COLLINS, Maine JAMES M. JEFFORDS, Vermont
JAMES M. TALENT, Missouri RUSSELL D. FEINGOLD, Wisconsin
ELIZABETH DOLE, North Carolina RON WYDEN, Oregon
MEL MARTINEZ, Florida BLANCHE L. LINCOLN, Arkansas
LARRY E. CRAIG, Idaho EVAN BAYH, Indiana
RICK SANTORUM, Pennsylvania THOMAS R. CARPER, Delaware
CONRAD BURNS, Montana BILL NELSON, Florida
LAMAR ALEXANDER, Tennessee HILLARY RODHAM CLINTON, New York
JIM DEMINT, South Carolina
Catherine Finley, Staff Director
Julie Cohen, Ranking Member Staff Director
(ii)
C O N T E N T S
----------
Page
Opening Statement of Senator Gordon Smith........................ 1
Opening Statement of Senator Herb Kohl........................... 3
Panel I
Mark McClellan, M.D., Ph.D., administrator, Centers for Medicare
and Medicaid Services, Washington, DC.......................... 4
Panel II
Tina C. Kitchin, M.D., medical director, Oregon Department of
Human Services, Salem, OR...................................... 32
Carl Clark, M.D., chief executive officer, Mental Health Center
of Denver, Denver, Co.......................................... 45
Wendy Gerlach, director of Pharmacy Operations, Roeschen's
Omnicare Pharmacy, Milwaukee, WI; on behalf of the Long Term
Care Pharmacy Alliance......................................... 57
APPENDIX
Prepared Statement of Senator Jay Rockefeller.................... 73
Questions from Senator Kohl for Mark McClellan................... 74
Statement for the Record from Robert Hayes, president, The
Medicare Rights Center......................................... 75
(iii)
IMPLEMENTATION OF THE MEDICARE MODERNIZATION ACT: DELIVERING
PRESCRIPTION DRUGS TO DUAL ELIGIBLES
---------- --
THURSDAY, MARCH 3, 2005
U.S. Senate,
Special Committee on Aging,
Washington, DC.
The committee convened, pursuant to notice, at 2:48 p.m.,
in room 628, Dirksen Senate Office Building, Hon. Gordon H.
Smith (chairman of the committee) presiding.
Present: Senators Smith and Kohl.
OPENING STATEMENT OF SENATOR GORDON SMITH, CHAIRMAN
The Chairman. Ladies and gentlemen, we welcome you. We
apologize to you for the Senate voting schedule that has
delayed our arrival. Hopefully, between my colleague and I, we
can proceed with this hearing. If another vote is called, we
will sort of ``Mutt and Jeff'' it between us.
This is an important hearing. I believe it will prove to be
quite informative. We are going to hear from a variety of
witnesses, all of whom have an expertise that can inform our
decisions about the implementation of Medicare modernization,
and more specifically, the transition of the so-called dual
eligibles from the Medicaid program to the new Medicare drug
benefit that is slated to begin on January 1, 2006.
I strongly believe that our ability to successfully
transition the 6.3 million Americans who are the poorest and
most vulnerable citizens into Medicare drug benefits ultimately
will prove the overall success or failure of this new program.
That is why I have called this hearing on this day, March 3,
and by looking at this program today and evaluating the
regulations that have been developed by the Centers for
Medicare and Medicaid Services, known as CMS, we have ample
time to act, if necessary, to make administrative improvements.
Now, before we get started, I would like to commend the CMS
staff for their dedication and outstanding work to develop
these policies. I have heard from many constituents, and I
believe we will hear from many of our witnesses today, they
have done an outstanding job. They have labored for the past
year in their effort to meet with a wide array of stakeholders,
provide opportunities for public comment, and incorporate many
of the comments received into the final product, which was
released on January 21.
However, as I have learned throughout my many years as a
legislator, no bill or other legislative product is ever
perfect. I have yet to vote on a perfect bill. Given time and
opportunity, improvements can be made, and that is the focus of
today's hearing, to determine if improvements are critical to
the successful implementation of the Medicare drug benefit,
whether adequate safeguards have been built into the system to
protect the poorest and most vulnerable, in fact, to be able to
protect these dual eligibles.
I look forward to learning more detail about the process
that CMS used to develop its regulations and to come to
understand more fully the rationale behind their final
decisions.
I also eagerly await the testimony of our second panel, who
will offer their insight based on their expertise in serving
this population in how best to organize the program. As many
people know, this population is very diverse. It includes young
disabled children, middle-aged persons with significant medical
challenges, and, of course, the elderly poor.
At present, Federal and State combined spending on
prescription drugs for dual eligibles totals almost $15
billion. However, to truly get an accurate picture of this
population, let us look at who are the dual eligibles. Seventy-
seven percent have annual incomes below $10,000, and nearly 25
percent are in nursing homes. Over 50 percent are classified as
being in fair to poor health. Most have multiple chronic
conditions, and 33 percent have significant limitations on
activities of daily living, such as self-care, cooking, and
even cleaning.
Therefore, as we begin to shape the Medicare prescription
drug program to ensure it is properly serving this high-need
population, it is clear to me that additional safeguards will
be necessary. The question that I will look to Dr. McClellan
and our other witnesses to answer today is whether the
regulations, as drafted, get the job done, or whether
improvements can and should be made. I also will look to our
witnesses to assess the benefit added by each of their
recommendations, because while improvements can be made, we
also must be reasonable in our expectations.
On January 1, 2006, millions of Americans who previously
had nothing will begin receiving prescription drug coverage. In
Oregon alone, that means 129,000 people will be helped. While
many have differing views of the benefit, there is no question
that the relief that will be felt by America's poorest and most
needy seniors will certainly be there.
I believe it is time to come together and to get the job
done properly and I hope my colleagues feel the same. I look
forward to working together with them on this and other
components of implementation, and I am confident we will
continue to have a constructive dialog within the Aging
Committee.
I now turn to my colleague, Senator Kohl of Wisconsin, the
ranking member of this committee, for his comments.
OPENING STATEMENT OF SENATOR HERB KOHL
Senator Kohl. I thank you, Mr. Chairman, and we welcome all
our witnesses who will be testifying here today.
The new Medicare drug benefit will be a big change for the
6.3 million beneficiaries nationwide, including 110,000 in
Wisconsin who are known as dual eligibles. These are seniors
and people with disabilities who qualify for both Medicare and
Medicaid. They typically have incomes below $10,000 and are
considered to be the most vulnerable beneficiaries.
Today, their drugs are paid for )by Medicaid, but as of
January 1, 2006, Medicaid will no longer cover them and they
must all switch to a new Medicare private drug plan. Now, I did
not support the Medicare drug bill for many reasons. While I
support adding a real drug benefit to Medicare, the new law, in
my judgment, fails to take common sense steps to lower drug
prices by allowing Medicare to negotiate for the best prices
and allowing less expensive imports to appear in our market. I
also felt that instead of setting up a straightforward drug
benefit in Medicare, the new law sets up a confusing and
inconsistent patchwork of private drug plans.
I believe Congress should still act to fix these problems,
but as long as the law is going forward in its current form,
then it is critical that when these low-income seniors and
people with disabilities are switched to Medicare that we get
it right. If we do not, they face disruptions in drug coverage
that could result in serious harm to their health.
I appreciate the steps CMS has taken to ensure a smooth
transition from Medicaid to Medicare for these people, but
several concerns remain and we must address them quickly as the
Medicare drug benefit takes effect in only ten short months.
Most dual eligibles do not understand their Medicaid
coverage will end and they need to select a private Medicare
plan. While CMS plans to automatically enroll them in a plan
and give them time to switch plans, many may end up in plans
that do not cover medicines that they had under Medicaid and
many will be unaware of or confused by their new choices.
In addition, private Medicare drug plans will be able to
limit the drugs covered by having closed formularies, and this
will cause confusion and could result in elderly and disabled
patients not getting the drugs prescribed by their physician.
Also, with one in four dual eligibles living in a nursing
home, we must be careful with the transition of these
vulnerable patients. They require specialized services through
long-term care pharmacies that provide 24-hour service, custom
drug packaging, and specialized monitoring. The move from
Medicaid to Medicare is going to present many challenges for
them, and I am looking forward to hearing from Wendy Gerlach
from Milwaukee to help educate us on this issue.
As these vulnerable individuals transition from the
Medicaid program they know to the uncertainties of the Medicare
drug plans, we run the risk of serious glitches that could
disrupt their care. So I am glad we are having this hearing so
that we can identify the challenges and solutions now and
minimize disruptions in drug coverage for these very vulnerable
people.
Again, I thank you, Mr. Chairman, for this hearing and I
look forward to hearing from our witnesses.
The Chairman. Thank you, Senator Kohl.
Our first panel consists of the administrator for the
Centers for Medicare and Medicaid Services, Dr. Mark McClellan.
Thank you, Mark. It is great to have you here and we look
forward to your testimony.
STATEMENT OF MARK McCLELLAN, M.D., PH.D., ADMINISTRATOR,
CENTERS FOR MEDICARE AND MEDICAID SERVICES, WASHINGTON, DC
Dr. McClellan. Thank you, Mr. Chairman and Senator Kohl. I
really appreciate this opportunity to discuss how we can use
the new Medicare prescription drug benefit to provide the best
possible assistance for our dual-eligible beneficiaries, and I
want to acknowledge the hard work of my staff at CMS and the
constructive input that we have received from so many health
professionals, advocates, and other experts on providing care
to these most vulnerable beneficiaries in support of our
effective implementation of this law.
This is important. The new Medicare drug benefit will
provide vital new help with drug costs for all Medicare
beneficiaries, however they get their Medicare. But it is
especially important for almost a third of our beneficiaries
with low incomes, beneficiaries who are living on their Social
Security check and who, until the Medicare Modernization Act
was passed, were too often having to choose between drugs and
other basic necessities. Under the Medicare law, these
beneficiaries will have a comprehensive drug benefit that will
pay for 95 percent or more of their prescription drug costs.
This includes all dual-eligible Medicare beneficiaries, many of
whom have faced limits on their coverage as States have
struggled to maintain their Medicaid coverage.
Mr. Chairman, the over six million full-benefit dual
eligibles will qualify automatically for the comprehensive low-
income subsidies in the new Medicare benefit, as you mentioned.
Under Medicare, these beneficiaries will have no premiums or
deductibles, and copayments of just a few dollars, and those
residing in institutions will have no cost sharing at all.
We are working hard to make sure that low-income seniors,
including all the dual eligibles, get the comprehensive help
that the Medicare benefit is intended to provide. We have been
working hard with States, the Social Security Administration,
other Federal agencies, and many other partners to meet the
challenge of moving the dual eligibles to the new comprehensive
Medicare benefit. We are implementing protections to make sure
that no dual eligible beneficiaries have any gaps in their drug
coverage as they move from Medicaid to Medicare.
We are taking new steps to make sure that the drug benefit
works well for beneficiaries, pharmacists, and the health care
providers who work with them through an ongoing dialog.
Throughout this year, we are going to continue to listen and to
collaborate to implement this new benefit effectively, and I
appreciate the opportunity to continue that dialog and to
identify further steps and issues that we need to address
through your hearing here today.
As an example of the work that we are doing now, since the
regulations were issued, I am pleased to announce that today,
CMS is issuing a request for proposals for a contract to assist
us in coordinating benefits and facilitating an accurate
accounting of a beneficiary's true out-of-pocket spending in
near to real time. This system, which we will be implementing
on schedule with the full drug benefit, will enable pharmacies
and plans to process a beneficiary's prescription smoothly,
even for a beneficiary who shows up at a pharmacy in January
2006 and doesn't have the plan card or doesn't even remember
the plan's name.
The system will enable plans to inform beneficiaries when
they have reached coverage limits or when they can expect even
greater financial relief for catastrophic coverage or from
other wrap-around assistance. It will tell them how much they
can save by switching to a generic version of their medicine.
They will have their claims processed correctly without the
need for bringing in receipts or submitting other documentation
if they have wrap-around coverage, and they won't even need
their drug benefit card.
Mr. Chairman, the transition to the Medicare drug benefit
has already started. We are getting data from the States to
identify dual eligible beneficiaries and we will begin personal
outreach to them through mailings and other contacts this
summer and will provide follow-up details in the fall. Early in
the fall, about three months before the drug benefit begins, we
will let them know what drug plan they have been assigned to if
they don't select one themselves by the end of December. We
will also notify the plan so that the plan can assist in
ensuring a smooth transition.
We will be conducting a major education and outreach
effort. Beneficiaries will get help through our 1-800-MEDICARE
24/7 bilingual support line and through local outreach
activities involving our regional offices and partners in State
health insurance assistance programs, Area Associations on
Aging, and many other public and private partners.
I am especially pleased to be working closely with the
Access to Benefits Coalition, a coalition of almost 100
beneficiary and patient support organizations who have had very
different political views, very different views about the
Medicare law itself, but who all have one thing in common. They
want to make sure that we are implementing this benefit, this
crucial new benefit for low-income seniors, as effectively as
possible.
We are also working with pharmacists, physicians, and other
health professionals on simple steps they can take to help make
sure their patients get the most out of the new drug benefit.
Of course, we deeply appreciate the assistance and support
of Members of Congress in reaching your constituents. We have
already prepared some basic materials on Medicare's new
benefits and they can be used in town hall meetings or in staff
interactions with Medicare beneficiaries back home.
Of course, our support for dual-eligible beneficiaries
doesn't end with getting them transitioned to a Medicare drug
plan on January 1. We are paying close attention to make sure
the new drug formularies provide access to medically necessary
treatments at the best possible price. The Medicare drug
benefit will cover virtually all types of FDA-approved drugs
and biologics. It is important to note that CMS is going to
ensure that when plans develop their formularies, they
recognize the special needs of many of our beneficiaries, such
as patients with mental illnesses, those with HIV or AIDS,
people with disabilities, those living in nursing homes, and
other beneficiaries who have been stabilized on certain, very
specific and sensitive drug regimens.
CMS regulations also require each plan to submit a
transition plan for moving enrollees currently taking a drug
that is not on the formulary to a medication that is on the
list. This process must address the clinical situations where a
beneficiary seeks to fill a prescription that is not on the
formulary but isn't aware of what is covered by the plan or
isn't aware of the exceptions process. We are going to review
these plans as part of our approval process and we are not
going to approve any drug plan unless its transition plan is
adequate to protect Medicare beneficiaries, all of our
beneficiaries.
Under our published guidance on prescription drug plan
oversight, we will be looking to see if the transition plans
are consistent with widely used best practices, retiree drug
coverage, and Medicaid plans today.
CMS has also tightened and streamlined the process for
exceptions and appeals for the formularies, and beneficiaries
can get help from their doctor or a designated representative
in this quicker process.
There also are some special protections in place for
beneficiaries who live in long-term care facilities. These
beneficiaries as you mentioned, are a large part of our dual
eligible population. Every plan must provide coverage to all
its enrollees who live in any nursing home in its region, and
we will have specific performance and service criteria that
pharmacies will need to meet in order to serve nursing home
beneficiaries. These criteria will address delivery and
packaging and urgent access and those other critical needs that
you all have mentioned to guarantee there will be no change in
drug safety and no change in drug availability for this fragile
population.
In addition to all this, if a dual-eligible beneficiary
finds that their plan is not the best fit for them, they may
change plans at any time.
On all of these transition issues for dual-eligible
beneficiaries, we are working with the States to anticipate
possible problems and will work together to deal with the
transition challenges as they arise. We have already issued a
set of guidance documents. We have specific State-by-State
contacts, and we have an active work group that focuses on
addressing all of the State issues. This involves
representation from the States, CMS, and the Social Security
Administration. This group has listed out the issues that the
States need to address in handling the transition and it has
worked to develop a checklist for the steps that States can
take with assistance from CMS to execute the transition
effectively. We will keep working together until we get the job
done.
Thank you for the opportunity to talk about the transition
to this important new benefit, which is going to greatly
enhance the quality of life for our beneficiaries in greatest
need. I am looking forward to working with you as we continue
to reach out to review and to examine the best ways to provide
this critical new help to our most vulnerable beneficiaries on
time on January 1, 2006. I am happy to answer any questions
that you all may have. Thank you.
The Chairman. Thank you very much, Doctor.
[The prepared statement of Dr. McClellan follows:]
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The Chairman. On the last recess from which we just
returned, I spent a lot of time with different provider groups
on this very issue and one of them was the assisted living
folks. As you probably know, in the State of Oregon, the State
regulates assisted living, to a standard similar to nursing
homes; however they are being treated differently than nursing
homes in the new drug benefit. I just wonder if you can speak
to that. Would you include them if there were certain standards
met that would ensure safety and continuity of care for the
patients?
Dr. McClellan. Yes. Assisted living facilities are now
providing an important part of long-term care assistance on
this now very broad spectrum of long-term care assistance that
we have. It is a very effective way of delivering long-term
care services, medical services and other support that
beneficiaries need to stay in the community. We absolutely
envision beneficiaries in these settings being fully supported
in meeting their prescription drug needs.
The Chairman. But aren't dual-eligible beneficiaries
currently living in assisted living facilities excluded under
the regulations from receiving the same level of coverage as
these in nursing homes.
Dr. McClellan. Well, they are not treated as nursing homes
under the regulations, but our regulations focus on beneficiary
needs. If there is a plan that discriminates against any class
of beneficiaries, including those living in assisted living
facilities, we would not approve that plan.
So as with these other aspects of care, what we have tried
to do in our regulations is lay out the conditions, the best
practices that we think need to be met to serve all of our
beneficiaries regardless of setting. If there are any specific
concerns about assisted living facilities that you have that
you think we haven't fully addressed, we would be delighted to
hear from your staff about it. We want to make sure that
beneficiaries, regardless of setting, have access to the drugs
that they need, and we think we have a good set of guidances in
place to do that, but we are going to keep working on this to
make sure we get it right.
The Chairman. It does seem to me that often, the people
that are obviously writing the regulations, they are at work
and they are healthy and they probably take one or two
prescriptions at the most, but the people who are likely to
receive these may take a lot more than that. Can you explain
the methodology that was used in terms of formulating what
would be available to them?
Dr. McClellan. Well, there have been a comprehensive set of
steps and approaches that we have used to make sure that we are
using all of our authorities effectively to provide access to
medically necessary treatments at the lowest possible cost.
This includes everything from how we set up the price
negotiation under this drug program, and according to our
actuaries and independent Congressional Budget Office the
projections are that we are going to get the lowest possible
prices for the drugs. An add-on government negotiation wouldn't
save any more. To ensure how we are actually overseeing the
formularies, to how we are overseeing implementation of
exceptions and appeals processes.
So there has been a comprehensive process. As we issued the
regulations, we also held a whole series of open-door forums
for public participation on particular topics, provided
opportunities for written comment--we got over 7,000
substantive comments on our drug benefit regulation--and held
many other meetings with key stakeholder groups. Those
activities are still ongoing. We have issued the final
regulations, but those activities are still ongoing.
I also want to emphasize that in addition to the
regulations, we have tried to be as clear as possible about the
standards that we are going to use to oversee the drug benefit,
that including standards for the formulary. It includes
standards for the so-called P&T committee that helps make sure
that the formularies are covering all medically necessary
treatments. It includes standards for the use of prescription
drug management techniques, like prior authorization.
In all these areas, we are looking for the adoption of best
practices. There are good benefits being provided today to
these very vulnerable populations and we want to bring in the
best practices used in retiree plans or Medicaid plans to the
Medicare population that will be served under the new
comprehensive benefit. This process is ongoing, but we have
taken a lot of steps already to make sure we are doing it
effectively.
The Chairman. Let us say you have got someone currently on
Medicaid and they have a full panoply of drugs to choose from,
but in transitioning to this Medicare drug benefit program,
they have got real complex health needs and let us say the
plans that are out there don't cover all of their drugs. Would
it be advisable to have a phase-in period, a transition period
of six months or so? I think some of our witnesses on the
second panel may testify to that effect.
Dr. McClellan. We have heard some of these ideas about
transition periods. Let me start out by just making clear that
we intend to implement this law so that the beneficiaries can
get access to medically necessary treatments from the start
under this new program, and we view that as including effective
transition plans for managing their medications.
While it is true that some Medicaid plans provide
comprehensive access to a broad range of drugs today, many
plans do impose limits already, and, in fact, there are good
models out there from Medicaid plans that use preferred drug
lists as to how transitions can be managed effectively.
We would require our plans to have effective transition
plans in place for managing the benefits. This is going to be
particularly important at the start of this program, when many
beneficiaries may be on particular drugs, that are not covered
on the formularies. For that period in particular, we will have
some extra efforts and we are going to be paying extra
attention to make sure there is a smooth transition.
There have been ideas about whether the State programs
could continue during this period. One option that we have been
discussing with a lot of States would involve filling a 90-day
prescription in December to allow the beneficiary to continue
to have access to their current drugs through the first part of
2006. Now, we have some limits on what we can do. Our authority
to pay Federal matching funds for Medicaid drugs that are
covered under the Medicare drug benefit ends on December 31.
But this is another step, in addition to the transition plans
and the effective use of proven approaches to managing
medications, which we will be pursuing as we implement the new
drug benefit.
The Chairman. Thank you, Doctor.
Senator Kohl.
Senator Kohl. Thank you very much, Mr. Chairman.
Dr. McClellan, as you know, for many people, if treatment
is interrupted for even just a few days, it could result in
hospitalization, disease progression, drug resistance, or even
death. So we need to make sure that nobody falls through the
cracks during this transition.
Let us assume a senior or a person with a disability walks
into their local pharmacy on January 1, 2006, tries to fill a
prescription for the drug that they have been taking for years,
and they find that it is not covered. How will they know how to
proceed, and how long will it take for their case to be
resolved, and is there any guarantee that they will be able to
get the drug that has worked for them for years?
Dr. McClellan. Senator, we absolutely want to make sure
that they can continue to get access to the drugs that they
need. In fact, that is why this drug benefit implementation is
so important. I saw in my own medical practice before coming
into this job a lot of my patients who didn't have access to
drug coverage in Medicare having more complications, more
visits to the doctor and more visits to the hospital. So
preventing that is what we absolutely want to do with this
transition to prevent any gap in coverage for beneficiaries who
have coverage now.
There are a number of steps that are going to help make
sure that we don't run into that problem of a gap in coverage
for full benefit dual-eligible beneficiaries on January 1.
First of all, as I mentioned, beneficiaries will find out about
the plan they have been assigned to, if they don't choose one
on their own in early October, three months before the start
date. We will also notify the plan of that assignment so that
there can be steps during that period to make sure the
beneficiary knows specifically what is coming, what drugs are
going to be covered and whether there is any transition needed.
There may or may not be, many of these plans will continue to
cover drugs that have been proven to be medically effective to
make sure there are no problems with coverage.
In addition, as I announced earlier, we are implementing a
new program, one that I just announced today, that will make
sure that if a beneficiary shows up at a pharmacy on January 1,
even if they don't have a drug card, even if they don't know
which drug plan they are assigned to, if they know their name,
date of birth, just some basic identifying information, we will
be able to find them and the pharmacist will be able to tell
them in real time what their coverage is and what they have to
pay. They will be able to fill that prescription without a gap.
Finally, our drug plans are going to have to have
transition plans in place so that if a beneficiary comes in on
January 1 needing a medication refill, an effective mechanism
is in place to deal with that. We are basing our approach on
what has been proven to work already for managing medication
transitions, and a usual approach is to provide a one-month
supply or some supply of that current medication while the plan
sorts out the appropriate management of that patient with the
patient's physician over the next month.
In many cases, there may be a need for a medical exception
so that the patient can continue that current medication
longer. That is built into our program, too. We absolutely do
not want there to be any gap in coverage for our dual-eligible
beneficiaries.
Senator Kohl. So you are saying that if an individual shows
up at a pharmacy needing a particular specific drug, in no case
will they be turned away, that they will be able to get that
drug?
Dr. McClellan. What I am saying, Senator, is that we are
going to make sure that our beneficiaries have access to all
the medical treatments they need, all the drug treatments they
need without a gap. If there is a good reason for a
transition--remember that having the formularies and the price
negotiation that comes from that is going to help us keep the
cost of the drug benefit down and it is also going to help save
the beneficiaries some money, too--the plan must have an
effective, proven approach in place to make sure that any
transition is managed effectively, that the patient gets the
drug that they need.
One approach to doing that would be to let the patient know
months ahead of time, in October or November, after they know
that this person is going to be assigned to the plan, that
certain drugs are not on the formulary and to work out a
transition ahead of time. If that doesn't happen before January
1 and the patient just shows up in the pharmacy, as you said,
the plan has to have an effective, proven approach in place to
make sure that patient can be managed effectively. Often, that
will include filling the prescription there for some period of
time while the coverage issues are sorted out and it is
determined whether that patient needs to continue on a specific
medication or could do fine with the alternative treatment that
is covered on the formulary.
There may be other approaches, too. There are approaches
that have been proven to handle these situations effectively in
Medicaid plans, in many retiree plans and FEHB plans; Those are
the kinds of approaches that we are going to require in the
Medicare drug benefit.
Senator Kohl. As you know, Doctor, States will initially
save money, since they will no longer have to cover drugs for
Medicaid. States are then required to pay back most of those
savings to the Federal Government and this claw-back provision,
as you know, is based on how much each State spent on
prescription drugs in 2003 and is increased by the annual
growth of drug spending.
Let us look at a State like Wisconsin. After facing high
drug costs through 2003, Wisconsin Medicaid began aggressive
cost containment and then saved money. However, their claw-back
payment will be based on the higher drug costs that they face
in 2003 and it will increase every year as drug spending
increases. Conceivably, Wisconsin could owe the Federal
Government more in claw-back payments than they would save by
no longer having to provide a Medicaid drug benefit.
So what can be done to change this? Shouldn't there be
flexibility to make a more accurate determination of a State's
payment back to the Federal Government?
Dr. McClellan. Senator, we absolutely want to make sure
that States are saving money, as was intended under the
Medicare Modernization Act. There are several reasons that I
think even the State of Wisconsin is going to come out ahead.
By the way, it has been a real pleasure to work with your State
on expanding its Medicaid coverage of prescription drugs. As
you know, we approved a Pharmacy Plus program that allowed
Medicaid coverage to expand in 2002 and we implemented the
steps to make it possible under Medicaid for the State to
negotiate those better prices for drugs. It has been a pleasure
to work with the States that do that and we are going to keep
working with the State of Wisconsin to make sure that the State
does get savings as we make this transition in Medicaid.
As you mentioned, there is a pay-back provision for a
portion of the cost projected forward from 2003. That fraction
starts out at 90 percent and it goes down over time to 75
percent. So there is some room there, even if the State did get
some additional savings since 2003, to make sure they still
come out ahead.
We have asked every State to make sure we have the most up-
to-date data from their own experience to use as we calculate
their payments under this program and we will be going over the
numbers with each State, including Wisconsin, to make sure that
there are benefits for the States.
Our independent actuaries have looked at this again in the
context of our final rules and we are projecting a total of
over $8 billion in savings for the States over the next 10
years. It is going to come from the savings they will get on a
per capita basis for their beneficiaries. It is also going to
come from the savings that they will get from Medicare picking
up more of the costs for what has been covered under Pharmacy
Plus in Wisconsin. It is also going to come from the Federal
Government picking up the costs of all the State of Wisconsin's
retirees. You have some very good retirement benefits for your
State workers in Wisconsin and we are going to be providing
subsidies worth about $1,000 per retiree.
If you add all that up, I am confident the State is going
to come out ahead, but we want to work closely with the State
of Wisconsin and any other State, going over their numbers to
make sure we get it right.
Senator Kohl. Thank you, Doctor.
Thank you, Mr. Chairman.
The Chairman. Thanks, Senator Kohl. I have been advised the
next vote is in about five minutes, so we will figure out how
to proceed.
But Doctor, a couple follow-ups. Would CMS consider having
drug plans cover the current drugs during the transition
period, also requiring coverage through the appeals process,
for example, in addition, where these plans will not cover the
non-formulary drugs?
Dr. McClellan. We will require the plans to have an
appropriate transition program, and again, this is not
something that we have to invent anew here. There are programs
that have been adopted in State Medicaid plans where they have
preferred drug lists and managed transitions and retiree plans
and the like. Depending on the medication, it may be
appropriate for providing some continuation of coverage.
As you know, we have tightened up our appeals timeframe so
that for an urgent medical need, an exception to termination
must be done within 24 hours. We want to make sure that there
is no gap in access to medically necessary treatments.
We will keep considering other ideas about how to implement
this effectively, but again, I think if we base our approach on
proven effective approaches from the private sector and from
effective Medicaid drug benefit plans, that is the best way to
go, to use the experiences that are already out there to manage
transitions effectively and to deal with appeals and exceptions
in a timely way.
The Chairman. Very good. In a Finance Committee hearing, I
asked you when we were discussing the USP standards about
specifically covering antidepressants, a class of drugs that
treat mental illnesses. Can you give us an update on this issue
and explain how this class of drugs is going to be provided to
people with mental illnesses?
Dr. McClellan. Well, mental illnesses is one of the groups
of beneficiaries that we are going to be looking at especially
closely as we review formularies and the whole structure of the
drug benefit to make sure it doesn't discriminate against some
of the people who can most benefit from prescription drug
coverage.
In addition to the USP process, which had a number of
categories for antidepressants in their final guidance--that is
one factor that may go into our reviews for the plans that want
to use the USP approach--we are also going to be looking at
whether a plan is providing coverage for antidepressants in
ways that are similar to effective plans that exist today. We
will be using comparisons to some of the most popular FEHB
plans, which provide access to a broad range of
antidepressants. We will also look at comparisons to existing
Medicaid plans with their preferred drug lists for their access
provisions. And again, for tiering approaches, for the use of
other tools, we will be looking at comparisons to best
practices in successful plans today.
We will keep in close touch with you. I know this
particular area is of great interest to you.
The Chairman. It is.
Dr. McClellan. We absolutely intend for the Medicare
benefit to be effective for coverage of antidepressants. This
is a very common condition, an undertreated condition in our
senior population, and it is one that contributes to a lot of
reduced quality of life and premature deaths in Medicare
beneficiaries and I really want to take that on as we implement
the new drug benefit.
The Chairman. Dr. McClellan, thank you for being our first
witness and thanks to you and your staff for the way you take
on a very Herculean job. We will turn now to our second panel
with our appreciation to you.
Dr. McClellan. Thank you for your support and we look
forward to continuing to work closely with both of you and the
committee. Thank you very much.
The Chairman. Thank you.
The Chairman. We will now call up our second panel, Dr.
Tina Kitchin, medical director of the Oregon Department of
Human Services in Salem, OR; Dr. Carl Clark, CEO, Mental Health
Center in Denver, CO; and Wendy Gerlach, the director of
Pharmacy Operations from Milwaukee, WI. We welcome you all. We
thank you for your time with us and we again apologize to you
for the delay in this hearing. Hopefully, it won't be much
interrupted with any delay.
Why don't we start with Dr. Kitchin.
STATEMENT OF TINA C. KITCHIN, M.D., MEDICAL DIRECTOR, OREGON
DEPARTMENT OF HUMAN SERVICES, SALEM, OR
Dr. Kitchin. Chairman Smith, members of the committee, I
would like to first thank you for giving me this opportunity to
testify on this very important matter. I would also like to
thank the Congressional members who helped pass this momentous
legislation that guarantees access to medications for a very
needy population.
I also would like to emphasize that I do believe that CMS
has done an incredible job in some very tight timeframes, has
done a wonderful, professional job of reaching out to numerous
people and has attempted to make this the best possible
situation that they can.
However, Oregon continues to have some significant concerns
about what this will mean for dual eligibles. The initial
choice counseling period, or what people have been calling the
transition, I think, is a special concern to us. If you think
about this, it is going to be a very complicated process
requiring beneficiaries to compare their current medications to
brand new formularies, their current pharmacies to networks of
pharmacies, potential for enhanced benefits, potential for
changes in premiums, et cetera, and it is going to be a very
complicated choice process.
However, within the duals, we are dealing with people with
dementia, developmental disabilities, significant mental
illness, some that are homeless, et cetera. The bottom line is
that this population is not going to successfully navigate the
Internet and the 1-800 numbers. They are going to require the
assistance of others and in a lot of situations, that means
that Oregon, as the State Unit on Aging, the State Medicaid
Office, and the State Mental Health Authority, is going to have
to assist people in some of those very difficult choices.
When you look at the timeframes, I don't know how we are
going to do it within the current timeframes. I appreciate the
fact that people are going to be auto-enrolled as soon as the
plans are available and will be notified of that auto-
enrollment. Unfortunately, a random process maximizes their
chance that they will be in a plan that won't meet their needs
and they will still require being walked through that very
complicated process to get to a place where this drug benefit
is of assistance to them.
I don't know how Oregon will be able to successfully do
that within this timeframe. I think that there are some
mechanisms under both regulation and potentially statute that
could assist with this. I also remain concerned about the fact
that under the current regulations, States are required to set
up a parallel low-income subsidy determination system for a
newly eligible group, parallel to Social Security. That is
going to divert our attention from a very important process of
assisting people to be transitioned into these plans.
The Chairman. Doctor, did you hear anything from Dr.
McClellan that gave you any comfort, or do--the fears you just
described, remain just as real?
Dr. Kitchin. Chairman Smith, I know that they really want
to make this as beneficial as possible and as smooth as
possible. When we moved the Medicaid eligibles into managed
care, mandatory managed care, I know that it took Oregon well
over a year of planning plus then a year to roll out the
process, and at the same time, it was a very intensive workload
and it was very difficult to do. I think those choices are
small compared to the choices that beneficiaries are going to
be faced with this year.
I also think that the part of the regulations that
currently require the plans to have adequate transition plans
doesn't give many details or specifics upon what that is going
to look like, and I know that working with managed care plans
in Oregon, we have plans that go above and beyond what is
required of them, but we also have plans where it is a struggle
to get them to do the minimal. I am afraid that some of these
plans will do the minimal or less, and without the detail in
those regulations, that concerns me.
I am also concerned a bit about access to long-term care
pharmacy services, including those that are in our home and
community-based system. You mentioned the adult foster homes
and the group homes. Long-term care pharmacies provide very
needed services and these regulations don't protect that access
for beneficiaries.
I think my red light is on.
The Chairman. OK. Thank you very much, Dr. Kitchin.
[The prepared statement of Dr. Kitchin follows:]
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The Chairman. I think there is a vote starting. Would you
like to go and vote, and I will--I want you to be here for your
constituent.
Senator Kohl. I will be right back.
The Chairman. OK. Carl Clark, please proceed.
STATEMENT OF CARL CLARK, M.D., CHIEF EXECUTIVE OFFICER, MENTAL
HEALTH CENTER OF DENVER, DENVER, CO
Dr. Clark. Thank you, Chairman Smith. I am Dr. Carl Clark.
I am the CEO of the Mental Health Center of Denver. I have been
practicing psychiatry for over 20 years and I am an assistant
professor at the University of Colorado School of Medicine.
The mental health center that I administer serves thousands
of uninsured and indigent people every year, most of which have
serious mental illnesses, like schizophrenia and bipolar
disorder.
My testimony today reflects the consensus views of the
National Council for Community Behavioral Health Care, the
American Psychiatric Association, the National Alliance for the
Mentally Ill, the National Mental Health Association, the
Treatment Effectiveness Now Project, the American Association
for Geriatric Psychiatry, and the National Association for
State Mental Health Program Directors. Although each of these
organizations is strongly committed to the successful
implementation of MMA, we are concerned about the required
transition of dual eligibles to the new Part D drug benefit and
here is why.
MedPAC recently estimated almost 40 percent of the 6.5
million dual eligibles have cognitive impairments and mental
illnesses. Dual eligibles are twice as likely as others to have
Alzheimer's disease, and thus, many of these people may lack
the capacity to manage the automatic enrollment process and
ensure that they get the medications that they need.
At MHCD, I am personally responsible for the mental health
care of a man who is dually eligible. Because of
confidentiality, I will call him Peter. He is in his 50's, late
50's. He was homeless for many years, wandering the streets
because of untreated schizophrenia. Through a combination of
intensive services and the latest psychotropic medications, we
got him off the streets. He is living independently in the
community. He has gone back to school and connected with his
family. He also has diabetes and coronary artery disease. Mr.
Chairman, I can tell you that he has a complicated medication
regimen.
Because of the special health care needs of dual eligibles,
CMS included the provision in the final MMA rule requiring this
population to be automatically enrolled in Part D plans, and
the mental health community applauds Dr. McClellan for taking
this critically important step. However, even with this, we
have concerns.
CMS has stated that dual eligibles randomly assigned to
plans that don't reflect their current medications can re-
enroll into PDPs that do. Based on my clinical experience, I
have serious doubts about this approach.
Let us go back to Peter. Even though he is doing well with
his schizophrenia, he still has trouble with his memory and
speech and information process and decisionmaking. He is going
to need a lot of help to negotiate these plans from our case
manager and his mom, who is in her 80's and actually doesn't
even live in Colorado. Coverage gaps for particular medications
are going to happen, and what we want to do is really minimize
that.
So specifically, this is what we propose. People that are
clinically stabilized on antipsychotic medications or other
psychotropic medications should maintain access to those same
medications regardless of the PDP they are enrolled in. This
exception to the plan's formulary or utilization process would
be automatically granted without prospective review by the PDP
when the attending physician provided written certification
that the patient is clinically stable, the medication is
medically necessary to maintain the functioning, and the
physician would also be required to certify that mandatory
switching to an alternative drug formulary would be medically
contradicted. Plans should defer to the physicians' medical
determination.
The Chairman. Carl, did you hear Dr. McClellan speak to
this sufficiently? Did it allay your fears? You are making the
point I was trying to make----
Dr. Clark. Yes. My fears are not allayed because, like
Peter as the example, he has three chronic conditions that need
to be treated. If he does not get all the medicines for each
one of those conditions, he is at risk for hospitalization,
emergency room care, and those sorts of things.
The Chairman. Are you seeing any of the plans out there
that would accommodate someone like Peter?
Dr. Clark. I say that there are lots of people like Peter
that are going to be faced with which plan will cover all my
medications.
The Chairman. Just for the record, your point is there
needs to be an override of the plan for people like this----
Dr. Clark. Exactly.
The Chairman [continuing]. So that their unusual
circumstances can be accommodated.
Dr. Clark. Exactly. Since this final MMA rule requires
plans to have an appropriate transition process for dual
eligibles during the initial enrollment period, CMS should
employ its review authority to ensure that these key continuity
of care principles are followed. Let me note that the agency in
its own strategy on formulary reviews noted that formularies
should contain the majority of antidepressant and antipsychotic
medications, and further stated, when medically necessary,
beneficiaries should be permitted to continue utilizing a drug
that is providing beneficial outcomes.
So the regulatory approach that we are proposing should
combine a robust outreach and an education program designated
to educate consumers while helping State agencies, patient and
family organizations, and community mental health providers
furnish one-to-one counseling that clearly will be required.
What is at stake here is that if CMS fails to adopt a
common sense approach, like we have outlined, the clinical
consequences are serious. A very large percentage of folks will
fail on switched medications and this will result in
decompensation, hospitalizations, ER visits, and, of course,
always the threat of suicide.
For States, the consequences are tough, also. If people
don't successfully navigate the transition to Part D, they can
wind up destitute, homeless, State prison, State hospitals. So,
Chairman, it is my goal for my staff and myself, who have
worked really hard to get Peter off the streets, that we keep
it that way.
[The prepared statement of Dr. Clark follows:]
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The Chairman. Maybe you don't have a percentage, but there
is also a public safety component to this. For some of these in
this category of people, if they don't have continuity of care,
is there a percentage of them that become dangerous?
Dr. Clark. Well, I will just give an example.
The Chairman. To themselves, as well?
Dr. Clark. Yes. At our center, we take care of about 4,500
people----
The Chairman. Forty-five hundred?
Dr. Clark. Forty-five hundred, and most of those folks are
in voluntary treatment. But we do have 350 people who are in
involuntary treatment because they don't have the insight that
they have an illness and they actually do become dangerous to
the community. So there is a public safety issue here, also.
The Chairman. What incidents of suicide might there be if
they don't have access, if they fall through the cracks, if
there isn't continuity of care? I mean, a lot of these people
will become unusually depressed, I suspect, may become a danger
to themselves. Do you see that in your practice?
Dr. Clark. Yes, we do. For folks with major depression,
bipolar disorder, schizophrenia, the lifetime incidence of
suicide is around 15 percent, and that risk goes up when people
are not in treatment or if they are not adherent with their
treatment.
Just to make a different kind of point, it sounds like
drugs are interchangeable, and it is certainly true that some
drugs may have similar efficacy, but for the individual person,
that may not be true. For the individual person, side effects,
which can be severe, can be very bad on one drug and not
another, and that often leads to people saying, ``I am not
taking this medicine anymore.''
The Chairman. Wendy, I am not ignoring you. I am just
waiting for Senator Kohl. [Laughter.]
I would love to hear your testimony, too, because I know
you are going to say many of the same things. Don't do your
testimony, but if you would like to chime in on any of what the
other two witnesses have had and save your testimony for
Senator Kohl, if you have a comment to make on that.
Ms. Gerlach. Thank you. I will.
The Chairman. Tina, you mentioned that in the last
transition that you went through, it took a year. Is that what
I understood you to say?
Dr. Kitchin. Chairman Smith, yes. It took a year of working
with the population to help them understand their choices and
move into care. It took a good year before that of the planning
with everybody around the table.
The Chairman. I think what I heard Dr. McClellan say is
that they are contemplating a 3-month transition period. I was
suggesting in my discussion with him a 6-month transition
period. That isn't a year, but with a running start that we
have before January 1, 2006, can you envision being up to
speed?
Dr. Kitchin. Senator Smith, given the three months before
plus an additional six months, I feel--I will sleep at night. I
am not sure that without that additional six months, it will go
smoothly.
The Chairman. Can you speak to the authorizations given to
nursing homes but not necessarily assisted living facilities?
Dr. Kitchin. Senator Smith, I would be glad to. As you
know, as you are well aware, Oregon uses a very extensive
community-based system. CMS in the current regulations has
really focused on nursing facilities and their access to long-
term care pharmacies, the services, and prevention of those
institutionalized people from having to pay copays. However,
when you have an extensive community-based system, such as
assisted living facilities or Developmental Disability group
homes, they also need the access to long-term care pharmacies
and they need--it is going to be very difficult for the people
who are already paying into their cost of their service to come
up with the additional amount of money to pay copays. So they
need those additional benefits.
The Chairman. Is there something that CMS should do to get
assisted living facilities some standards so that they can
qualify like nursing homes to provide for prescription drugs
onsite?
Dr. Kitchin. Senator Smith, I think that CMS has looked at
it from a regulatory point of view, and if instead they looked
at it from a beneficiary point of view, I think that their
regulations could require that the new drug plans allow access
to those services and allow the long-term care pharmacies to
actually deliver those services in those varied settings.
The Chairman. To assisted living facilities?
Dr. Kitchin. To assisted living facilities and the rest----
The Chairman. Mark is not here anymore, but I want to,
through the record, encourage him to do that. I think that that
is very important.
Wendy, do you have any comment on any of this so far?
Ms. Gerlach. I do. In the past, the skilled facilities that
we see now are becoming very acute settings. The assisted
livings are taking over where the skilled has left off. These
people have multiple diseases--diabetes, asthma, high blood
pressure. They need to have the specialized services that a
long-term care pharmacy can provide to them--specialized
packaging which cuts down on medication errors, 24-hour-a-day
pharmacy services, a pharmacist who is always available for
these assisted livings to call with any questions, emergency
deliveries. So I think it is very important that we are able to
provide these services as long-term care pharmacies to assisted
living.
The Chairman. Any other comment, Carl?
Dr. Clark. Oh, I could make a lot of comments. [Laughter.]
The Chairman. Go ahead. We have got time.
Dr. Clark. OK. Great. I mean, one of the things about the
consequences if somebody is on a medicine that works for them,
and I can say right now that in psychiatry in particular, we
have some medicines that work better than we have ever had in
the past and it is so gratifying to see people actually have a
life again and be in the community. Like Peter the example,
when he reconnected with his mother after being on the streets
for 10 years, that is a tremendous thing to see happen.
The Chairman. What are those drugs? What are the names of
them?
Dr. Clark. His particular drugs? Well, I am sure some of
the drug companies would really enjoy my saying the names----
[Laughter.]
But he is on Zyprexa. He is also on lithium, which is a
medicine that has been around for a long time. Then he is on a
variety of medicines for his diabetes and his coronary artery
disease.
But the point is that if somebody has a disruption in care
after they have found something that works, that is difficult
and the cost can be enormous. In Colorado--I don't know what
the cost is in other States, but our State hospital costs about
$95,000 a year for a person. So if we have an influx of people
that are hospitalized into the system, there are these kinds of
costs that are going to occur.
For me, one of the issues is that PDPs are managing a
pharmacy budget, but they are not managing the risk for the
other types of care that are going to be provided.
The Chairman. You are shaking your head, Tina. Do you want
to say anything about that?
Dr. Kitchin. Senator Smith, I agree. One of the ways that
managed care works the best is that the plan is at risk if they
deny a cheaper service and somebody goes into more expensive
service, whereas these new drug plans are only at risk for the
cost of the medications.
The Chairman. Let me just tell you publicly, I mean, we are
talking here about a Part D corrections bill, things that we
could do legislatively, but I will be honest with you. That is
a tall order before this is implemented, because I think the
Bush administration and perhaps a majority in Congress, and I
think many in the leadership of Congress, want to see what the
problems are before we start promoting fixes. So part of the
reason for this hearing is to get CMS to do as much as they
feel they have latitude to transition this smoothly.
But if they don't, can you already envision things that you
would like to see in a Medicare Part D corrections bill? Is
there something legislative you think that is really missing at
this point?
Dr. Kitchin. Senator Smith, if I could start, it would
depend upon the timeframe of it. Obviously, if this could occur
before we start rolling out this new drug benefit, a
lengthening of the time that States were eligible for Federal
participation, so although at one time never are both Medicaid
and Medicare at risk for the drug cost, but that we could slow
the phase-in process down.
The second of which is that I think having the minimum of
two drugs per class works for several different types of drugs,
but there are exceptional drugs, or exceptional conditions
where really they need to offer the entire gamut of drugs.
Those that are treating AIDS, antipsychotics, antidepressants
are one of the classes that really come to mind.
In addition, I think that there should be an ability to
grandfather in certain people with certain conditions. It is
very dangerous to transition somebody with a significant
seizure disorder off of their current medications and the
attempt to do that can actually cause a seizure that will end
somebody's life, although most seizures don't.
In addition, I think that the current framework is based
upon assuming that these Medicare beneficiaries can work
through an appeals and a grievance process and I have serious
concerns about the people that I know being able to respond and
say, ``No, this drug is not covered but I have these rights and
I can appeal and I need to get my doctor to do this and I need
to go through this process.'' I think that that is beyond a lot
of people's ability that I know in this system.
The Chairman. OK. I am going to go vote and I am going to
turn this hearing over to my colleague. But Carl, I would like
to just tell you, I have a particular personal reason to make
sure that the mental health component of this is done right,
and so if it isn't being done right, I want you to yell at me
to make sure we use our influence to get it right, because I
think the focus of your practice is truly life and death.
Dr. Clark. Thank you, Senator Smith. It is also quite
personal for me, too.
The Chairman. Thank you.
Ms. Gerlach. Senator Smith, may I address that question?
The Chairman. Yes. Sure.
Ms. Gerlach. One of the biggest concerns that I have, if
there could be a fix, if there are excluded drugs, such as
over-the-counter drugs, benzodiazepines, barbiturates, and
drugs for weight management. Those we see as a big concern in
the long-term care setting. Benzodiazepines can be given for
anxiety, and I will throw this example out.
Somebody in the last days of their life are anxious about
what is happening to them. One of the drugs that is given to
them is called Atavan or Lorazapan, which is a benzodiazepine.
Who wants to be sitting in that room and be denied
benzodiazepines or the Lorazapan that can give comfort to your
loved one while you are watching them pass away?
The Chairman. Yes. I understand.
Senator Kohl [presiding]. I thank you, Senator Smith.
I am going to introduce Wendy Gerlach right now for her
testimony. She is director of Pharmacy Operations in Wisconsin
for Roeschen's Omnicare in Milwaukee. For the last eight years,
she has worked at Wisconsin's largest long-term care pharmacy,
serving nursing homes, assisted living facilities, and
correctional care. We are very fortunate to have you here today
to describe the unique challenges long-term care pharmacists
will face with this new Medicare drug law. We look forward to
your testimony.
STATEMENT OF WENDY GERLACH, DIRECTOR OF PHARMACY OPERATIONS,
ROESCHEN'S OMNICARE PHARMACY, MILWAUKEE, WI; ON BEHALF OF THE
LONG TERM CARE PHARMACY ALLIANCE
Ms. Gerlach. Thank you, Senator. Chairman Smith, Ranking
Member Kohl, and members of the committee it is a privilege to
appear before you today and especially before my own Senator.
My name is Wendy Gerlach and I am the director of Pharmacy
Operations in Wisconsin for Omnicare Pharmacy. Omnicare's
experienced staff of pharmacists, nurses, and technicians serve
approximately one million patients in 47 States. I am grateful
for the opportunity to testify today on behalf of the Long Term
Care Pharmacy Alliance, whose members provide pharmacy services
to more than 60 percent of the 1.6 million nursing home beds in
the United States.
The average resident is approximately 84 years of age,
suffers from eight distinct diseases, and consumes nine or more
different medications concurrently. The instance of cognitive
impairment among these individuals is nearly 75 percent.
Nationwide, Medicaid currently provides prescription drug
coverage for approximately 70 percent of the nursing home
residents. It is important to recognize that these residents
are not your typical cash-and-carry customers and the
specialized pharmacy services they receive are different from
retail pharmacy services.
As I noted, they are typically frail elderly and often
cognitively impaired. Their pharmacy needs are quite different
from those of the average ambulatory Medicare beneficiary who
does not reside in an institutional care setting.
As long-term care pharmacies, we provide a large range of
specialized services. These services represent the standards of
practice developed to assure patient safety and quality care
for nursing home residents.
The primary payer for pharmacy services for nursing home
residents is Medicaid, which establishes consistent rules for
coverage. While States may impose access restrictions, such as
preferred drug lists and prior authorization, Medicaid
beneficiaries are entitled to access to all medically necessary
drugs.
Given the different structures of current Medicaid and
future Medicare drug coverage, we remain concerned about the
operational impact of multiple plans in each region competing
for Medicare beneficiaries. An average-sized nursing facility
of 150 beds could conceivably have residents of two or more
plans, all operating under different formularies and exception
processes. The resulting confusion could increase the risk of
medication errors.
In addition, we are very concerned that the MMA
specifically disallows coverage of certain drug classes. The
excluded classes include over-the-counter drugs,
benzodiazepine, barbiturates, and drugs for weight management.
Although State Medicaid programs have the option of continuing
coverage of these drugs, it is unclear whether they will.
Impeding access to these products will almost certainly result
in increased hospitalization and higher cost to the program.
Therefore, we believe dual eligibles must be assured access
to these excluded drugs. We recommend that Congress strike the
MMA's prohibition on coverage of these drug classes or ensure
the States remain obligated to cover the excluded drugs for
this population.
While we applaud CMS's commitment to enrollment, the
nursing facility staff and the long-term care pharmacy must be
involved for enrollment to be successful. The nursing facility
can ensure that its residents know which plans include the
long-term care pharmacy in their network of providers. In
addition, nursing facilities and long-term care pharmacies must
be notified of the plan in which the resident is enrolled so
that caregivers understand which plan will be responsible for
each resident.
Further, moving medically complex patients from a list of
well-tolerated and effective drugs to alternatives required by
a plan formulary would pose serious challenges. Imagine a
common scenario in which a nursing home resident is on eight
different drugs covered by Medicaid and three of those are
switched at once and there is an adverse event. It would be
difficult, if not impossible, to determine which drug caused
the adverse event. We strongly encourage CMS to issue very
specific guidelines that plans must follow in this regard.
The preferred option is to require a robust formulary for
residents of long-term care facilities consistent with the
current Medicaid benefit. In addition, an exception process
must exist to allow a pharmacist to override formulary
restrictions, subject to retrospective review. This option
assures that the patient, at least initially, gets the
prescribed drug without delay. A pharmacist would dispense a
drug and be assured payment from the plan until the
retrospective review could be conducted.
To summarize, we make the following recommendations to CMS
and to Congress. First, ensure continued access to medically
necessary drugs, either by striking the MMA provision excluding
coverage of certain drug classes or by requiring States to
maintain current coverage.
Second, facilitate enrollment of nursing home residents by
notifying beneficiaries, nursing facilities, and long-term care
pharmacies of the plan in which the beneficiaries are enrolled.
Third, create a clear standard for plans that will assure
access to medically necessary drugs for nursing home residents
and will mitigate the risk of switching multiple medications at
once.
We believe CMS is diligently working to ensure that
beneficiaries are not jeopardized during the transition to Part
D and look forward to working closely with CMS, the Congress,
and this committee to identify and work through potential areas
of concern.
Again, thank you for the opportunity to provide testimony
for this very important hearing.
[The prepared statement of Ms. Gerlach follows:]
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Senator Kohl. Ms. Gerlach, there has been some discussion
about creating a transition period where nursing home residents
could slowly transition from Medicaid plans which cover their
current drugs to the new private Medicare drug plans which may
or may not cover all their drugs. In your opinion, how long of
a period would you recommend, and what other factors should be
considered and included in this transition period?
Ms. Gerlach. Sir, I think that the transition period should
be six months to one year. This would allow us to move people
slowly to the preferred drug. Maybe we could go by categories
so that it is easier for the facilities, the pharmacies, the
physicians, so that they know which medications we are supposed
to be working on. I just think that we need at least six months
to a year to make a smooth transition, to make sure those
people that are in those nursing home beds aren't prone to
medication errors or go without their medication.
Senator Kohl. So I would take it from your answer and your
testimony that you are very, very concerned if this whole
process is supposed to commence, period, on the first of
January with no transition, that regardless of whatever
preparation they think they are making, there will be problems
that become insurmountable if this is supposed to occur on the
first of January without a transition?
Ms. Gerlach. Yes, sir. We have thousands of residents that
we currently serve in Wisconsin and I am very concerned about
the transition on January 1, if it is immediate. How hard is it
if you have a 150-bed facility and you have 100 people that are
dual eligibles now and on January 1, you have all these
different medications. Are the nurses going to remember to pull
the card? Is a new order going to be written in the chart? It
is not only a concern on the pharmacy part, but also the
nursing part and the facilities. They are very busy. They are
understaffed. We don't want to overwhelm the facility nursing
staff, either, which could lead to medication errors on their
part.
Senator Kohl. Mr. Clark, do you have an opinion about
January 1 and whether or not that should be just the beginning
of a transition period?
Dr. Clark. I think it should just be the beginning. I mean,
switching is not an automatic process. It is--when you were out
of the room, I talked a little bit about how drugs are not
necessarily interchangeable. There is a time period for
adjustment. There may be side effects that the person
experiences with one drug that they didn't with another and all
those things need to be addressed. It is a very short time line
to accomplish all this.
My center takes care of 4,400 people. We have 1,400 people
that this is going to be an issue for. It is going to be a big
burden for case managers and the staff to help people with the
transition, select plans, and a variety of things like that. In
our group, we have some folks that definitely have cognitive
impairments and need help with executive decisions and making
decisions.
Senator Kohl. Dr. Kitchin.
Dr. Kitchin. Senator Kohl, I also would concur that a 6- to
12-month period would be the best. I think that 6 months would
be a minimum in which this would happen safely.
Senator Kohl. Do you have any indication that Dr. McClellan
understands what you are saying and is coming from the same
direction, or are you concerned that they are not interested in
this six-month transition? Wendy? Or don't you have a sense of
it at this point?
Ms. Gerlach. Sir, I don't have a sense regarding that, but
what I would like to say is that we want to work with CMS to
make sure that this benefit works smoothly and that the people
that we are serving are not in danger. All we want to do, as
long as we know the rules, we can work within those rules. But
we need to work with the people making the rules to make sure
that they benefit the beneficiaries.
Senator Kohl. Mr. Clark, any sense of what CMS is thinking
at this moment?
Dr. Clark. I thought there was one disconnect for me, which
is when you asked the question about somebody going to the
pharmacy and now their medicine is no longer on the formulary
for their plan, what would happen, and the response was that
these PDPs needed to be able to have a plan in place to assure
a transition. Well, the reality is that the pharmacy plans
aren't doing the transition. The providers are doing the
transition. So there is a disconnect there for me about how
that is actually going to occur.
When CMS says that there are good practices out there about
transitioning people from one drug to another, I am glad there
are. I think most providers don't know what those are.
Ms. Gerlach. Can I make a brief----
Senator Kohl. Yes, Wendy?
Ms. Gerlach. In the nursing home, it is a three-way
communication. It is not just between the physician and the
pharmacy. It is between the physician, the nurse at the nursing
home, and the pharmacy. So the physician will write an order,
he will communicate that to the nursing staff, the nursing
staff will communicate it to us. Then if the drug is not
covered, we have to backtrack, go back to the nurse so that she
will know this is not covered so that she can contact the
physician and get it covered so that it will get switched to
the correct medication.
It is an administrative nightmare for everyone, and who is
going to do the work for the prior authorizations? Who is going
to take all the work that is required to submit all that
information to the PDPs? That is not answered. There is no
clear-cut plan that has been told to us, these are the steps
you are going to follow.
Senator Kohl. OK. Dr. Kitchin?
Dr. Kitchin. Senator Kohl, I think that CMS has been
working within very, very tight timeframes. I think they have
done a heroic effort to reach out and get input from lots of
people. However, I don't think that they have had some of the
day-to-day experience of doing these transitions and understand
some of the implications.
Senator Kohl. All right. Does anybody else want to make
comments about anything that you feel needs to be brought to
the table and put under the lights, any issues at all? Wendy,
do you want to speak first?
Ms. Gerlach. Yes, I will. There is another concern that we
have. What happens to the residents that are switching over
from Medicare Part A or coming directly from the hospital and
they have been stabilized on their medications and then they
transition into Medicare Part D? Is there going to be a
transition period for those residents, also, three months, six
months, so that we can switch those people over appropriately
and not take them off their medications as soon as they leave
the hospital?
Senator Kohl. All right. That is a good question.
Tina, do you have anything else you would like to bring to
the table?
Dr. Kitchin. Senator Kohl, yes, I would like to make a
couple more comments that I don't feel I had time to do, one of
which is I think that the appeals and the grievance process is
still--it has been tightened tremendously, but it is still
cumbersome for a lot of people in this population and I think
that CMS needs to require that the drug plans cover the
medications during the time that the person is going through
their appeals or grievance.
I am also concerned about the coordination of benefits
requirement. Right now, CMS has said that it doesn't believe
that CMS has the authority to share detailed drug information
with the States if the State is not also at cost risk for that
medication, and yet we will still be providing a significant
number of medical services to those dual eligibles and we need
to have access to that information without states paying the
drug plans for it.
Senator Kohl. All right. What we will do, if you would
like, in the absence of Dr. McClellan--I wish he were here
right now. I think it would be great to give you a chance to
ask him some of these questions and get the answers from him.
But if you want us--and we will, I would like very much to
present your questions directly to him and get an answer from
him so we can get back to you with some of these comments and
thoughts that you have had.
Carl, do you want to make any comments yet?
Dr. Clark. Well, the only comment I would say at the end
here is that what is the real cost for failure? I mean, there
is certainly the cost to the individual person about getting
ill again or having difficulties in that way, but there is a
ripple effect. It is not just that person. It is also the
families, the providers, everyone is affected by things when
they go awry, and I think that is what people are most
concerned about, is how do we assure that people who are
already doing well on their current medicines have something in
place where they continue to do well?
Senator Kohl. No question. It is crucial. We certainly do
not want a catastrophe on January 1. That would be a terrible,
terrible thing. In fact, there is no sense of a deadline on
January 1. As you are pointing out, that should be the
beginning of a process. It is not the end, it is the beginning,
and there is no need for us to feel that this thing has to be
fully in place and operational on January 1. I would like to
hope that Dr. McClellan feels that way, but we will find out.
Anything else, guys? Wendy?
Ms. Gerlach. No, sir.
Senator Kohl. No?
Dr. Kitchin. I would just like to thank you for this
opportunity. It has been very good to have this occasion to
express our concerns.
Senator Kohl. Thank you. It has been a good hearing and I
think it gives us the warnings and tells us that we need to be
careful and cautious in how we proceed, so your coming here and
testifying has been really important. Thank you so much.
Dr. Clark. Thank you.
Dr. Kitchin. Thank you, sir.
Senator Kohl. The committee is adjourned.
[Whereupon, at 4:08 p.m., the committee was adjourned.]
A P P E N D I X
----------
Prepared Statement of Senator Jay Rockefeller
I am very pleased that Senators Smith and Kohl are holding
this important hearing today. The transition of 6.4 million
dual eligibles from Medicaid prescription drug coverage to
Medicare Part D represents the largest transition of
beneficiaries from one insurance program to another, public or
private. It is essential that we in Congress work to ensure as
smooth a transition as possible so that no senior or disabled
individual experiences a gap in prescription drug coverage.
Medicare beneficiaries who also qualify for full Medicaid
are among our nation's most vulnerable citizens. They are
disproportionately women and minorities and live alone or in
nursing homes. Over half are limited in activities of daily
living and, in comparison to other Medicare beneficiaries, they
are much likely to have heart disease, pulmonary disease,
diabetes, or Alzheimer's. Therefore, it is crucial that we get
this transition right the first time.
The Medicare Modernization Act of 2003 (P.L. 108-173)
rightfully included Medicare prescription drug coverage for
dual eligibles. Medicare's universality is something I fought
hard for during the Medicare debate. I strongly believe that
low-income seniors and disabled individuals should not be
excluded from Medicare benefits because of their income levels.
While the Medicare law seems to support the principle of
universality, it simultaneously undermines it by treating dual
eligibles differently from other Medicare beneficiaries.
The law provides Medicare beneficiaries who are not dually
eligible for Medicaid six months to transition to Medicare Part
D. Yet, the law only requires a six-week transition period for
dual eligibles, from November 15, 2005, to January 1, 2006.
Moving a large number of seniors and people with disabilities
to an entirely new system for prescription drug coverage is a
major undertaking. In its June 2004 report to Congress, the
Medicare Payment Advisory Commission (MedPAC) suggested that
even large, private employers need at least six months to
transition their employees' drug coverage from one pharmacy
benefit manager to another. The two large employers that MedPAC
studied had 25,000 and 75,000 employees, respectively. The
states and the federal government are taking on a far more
complex task with 6.4 million dual eligibles.
Dual eligibles require adequate outreach, education, and
timing in order to adjust to major changes in our health care
delivery system. The Centers for Medicare and Medicaid Services
(CMS) has taken several steps to improve the transition of the
dual eligibles from Medicaid to Medicare. However, I fear these
steps do not go far enough. Automatic enrollment does not
guarantee that beneficiaries will know that they have been
enrolled in a new Medicare drug plan or know how to access
necessary prescription drugs using that drug plan. Once
beneficiaries are enrolled, they are likely to experience
ongoing confusion about covered drugs, authorized pharmacies,
and the Medicare appeals process.
In order to achieve the best possible outcomes for dual
eligibles transitioning to Medicare, we should extend the
transition period to at least six months. An extended timeframe
would give states enough time to carry out comprehensive
education and outreach initiatives. It would also give seniors
and individuals with disabilities time to explore their options
and gradually transition to Medicare Part D.
I have drafted legislation--the Medicare Dual Eligible
Coverage Act--which would achieve all of the objectives
mentioned above. I plan to introduce this legislation next
week, and I urge the Members of this Committee to support it. I
thank the distinguished Chairman and Ranking Member for
allowing me to submit a statement on this critical issue.
------
Questions from Senator Kohl for Mark McClellan
Question. Today we discussed the challenges with the
implementation of the Medicare Part D program for dual
eligibles. Dual eligibles are also a significant part of
nursing home populations and the President's budget includes a
$1.5 billion reduction in Medicare payments to nursing homes.
As a result, in real terms the payment would be lower per day
than it was in 1998 if the President's budget is enacted.
When rates dropped in 1998, 15 percent of nursing homes in
the country went into Chapter 11, and 7 out of the 12 publicly
traded companies filed Chapter 11. As a result, Congress
increased the rates and stabilized the industry.
In December, you and then Secretary Tommy Thompson held a
press conference in which you congratulated the industry for
its efforts on improving quality. Can you assure the Committee
that as a result of the implementation of the President's
budget there will not be a loss of the quality improvements
made, a reduction in the nursing home workforce or a disruption
in the delivery of nursing home services to either Medicare
recipients or dual eligibles?
Answer. We realize that the elimination of the $1.5 billion
temporary add-on to the skilled nursing facility (SNF)
prospective payment system raises concerns about how the change
will impact the quality of care in our nursing homes. First, I
want to assure you that quality improvements in nursing home
care have been a priority for this Administration and we plan
to continue our efforts in this direction.
Second, I want to point out that, while it is true that a
number of nursing homes filed for bankruptcy shortly after the
introduction of the SNF prospective payment system, the
financial problems these companies experienced were not
necessarily related to the SNF prospective payment system. In
fact, a Government Accountability Office review (``Skilled
Nursing Facilities: Medicare Payment Changes Require Provider
Adjustments but Maintain Access,'' GAO/HEHS-00-23, December
1999) of two of the largest publicly held chains (Vencor and
Sun Healthcare Group) found that the financial position of both
firms suffered from high capital-related costs; substantial,
non-recurring expenses and write-offs; and reduced demand for
ancillary services related to several other provisions in the
Balanced Budget Act of 1997. Vencor's SNF operations remained
profitable after the implementation of the SNF prospective
payment system. In addition, there were a number of media
reports that cited rapid expansion into other lines of
business, high capital costs, and inadequate cost controls as
other factors influencing the financial status of the SNF
industry.
The Department of Health and Human Services' Office of
Inspector General (OIG) conducted two studies on beneficiary
access under the SNF prospective payment system (``Early
Effects of the Prospective Payment System on Access to Skilled
Nursing Facilities,'' OEI-02-99-00400, August 1999; and,
``Early Effects of the Prospective Payment System on Access to
Skilled Nursing Facilities: Nursing Home Administrators
Perspective,'' OEI-02-99-00401, October 1999). These studies,
which surveyed nursing home administrators and hospital
discharge planners, found no widespread access problems in
placing Medicare beneficiaries in SNFs. The OIG confirmed these
preliminary findings in a follow-up study, ``Medicare
Beneficiary Access to Skilled Nursing Facilities: 2000,'' OEI-
02-00-00330, September 2000, which indicated that almost all
discharge planners reported being able to place Medicare
beneficiaries in SNFs. Further, Medicare data show a decrease
in the average length of hospital stays for beneficiaries prior
to a SNF admission, suggesting that the hospital stays are not
being prolonged by a delay in SNF placement.
While Congress enacted four add-on payments to the SNF
prospective payment system rates, the intent was to establish
the adjustments as temporary measures only. In fact, two of the
temporary add-on adjustments expired, according to statute, in
2002. At that time, there were also concerns about the negative
impact the payment reduction would have on quality. These
concerns were not realized, as evidenced by the positive profit
margins reported for the SNF industry. In its March 2005
report, the Medicare Payment Advisory Commission estimated that
the estimated aggregate 2005 Medicare margin for freestanding
SNFs (the majority of SNF providers) is 13 percent.
The remaining two add-on payments (a 20 percent increase
for 12 complex medical payment groups plus a 6.7 percent
increase for 14 therapy groups, and an across the board 128
percent increase for beneficiaries with AIDS) are scheduled to
expire when the Centers for Medicare and Medicaid Services
implements refinements to the case-mix classification system.
The President's FY 2006 budget request assumes the
implementation of case-mix refinements in the coming fiscal
year. Any such proposal would be introduced through the rule-
making process and would be open for public comment.
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