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HHS Secretary Tommy G. Thompson said the President's plan provides immediate help to people with Medicare by providing discounts on drugs while Congress and the administration work to design and implement Medicare coverage for prescription drugs.

"The new discount card program will give seniors greater power to purchase their prescription drugs at a discount," said Secretary Thompson. "It will especially help people with Medicare who currently have no prescription drug coverage, by lowering the prices they pay for their medications."

Discount cards are expected to save Medicare beneficiaries some 10 percent to 25 percent on prescription drug prices. Medicare serves about 40 million beneficiaries, and over 10 million of them do not have prescription drug coverage in addition to their Medicare coverage. The discount program can be implemented quickly, without new legislation, while Congress and the administration work to add a drug benefit to the Medicare program.

Under the Medicare-Endorsed Rx Discount program, people with Medicare will have the opportunity to learn about and join existing prescription drug discount card organizations. In turn, with larger memberships, the discount card organizations will be able to secure discounts for beneficiaries, just as large insurance plans do.

By giving people with Medicare easier access to information about the available discount card programs and the discounts they can get, they will have the opportunity to choose the card that best fits their prescription drug needs. A central feature of the Medicare Rx Discount Card Program will be the publication of comparative information, including drug prices available under each individual program.

"This program will give people with Medicare the same tools that others are already using to lower their prescription drug costs," Secretary Thompson said. "It is a constructive step that will give immediate relief to those who need it most, as we work to add a drug benefit to Medicare."

While the percentage of Medicare beneficiaries with drug coverage from other sources climbed throughout the 1990s, it appears to have leveled out in 1998. The proportion of beneficiaries who had prescription drug coverage at any point during 1998 was 73 percent, the same as in 1997, the first year since 1992 that the coverage rate did not increase, according to the most recent study of Medicare beneficiaries by HHS' Centers for Medicare & Medicaid Services (CMS). And only 45 percent have uninterrupted coverage for two consecutive years.

Since Medicare does not currently provide an outpatient drug benefit, enrollees seeking prescription drug coverage must get it from a Medicare+Choice plan, a private supplemental insurance plan such as a Medigap policy, or an employer-sponsored retirement plan. Some beneficiaries are covered under publicly funded programs, like Medicaid or the Department of Veterans Affairs.

All Medicare beneficiaries will be able to enroll in one of several Medicare-endorsed discount card organizations. A small one-time enrollment fee would be allowed, but it could not exceed $25. Each discount card organization will conduct its own enrollment activities, enrolling individuals or groups of individuals (including Medicare+Choice plan members, Medigap enrollees and beneficiaries with employer-sponsored retiree health insurance), and 1-800-MEDICARE as well as www.medicare.gov will provide general information and refer beneficiaries to individual programs.

CMS will annually endorse private organizations that meet certain qualifications. Those qualifications include financial stability, accessibility, availability of discounts, ability to communicate discounts to enrollees and other customer service features. Each program can use formularies, patient education, pharmacy networks, mail order and other commonly used tools to secure deeper discounts for beneficiaries. The endorsed programs will be expected to fund the cost of administering their programs through manufacturer rebates, administrative fees or other means.

Each of the endorsed discount card programs will participate in and fund a private consortium that will conduct several administrative functions, including development and implementation of a system to ensure that beneficiaries are enrolled in only one program at a time; making comparative discount and other information available; and reviewing marketing materials used by the discount card programs. Member organizations will make decisions about ongoing operations of the consortium.

"We will provide Medicare endorsement for strong, stable discount card organizations, and we will require them to work cooperatively in serving Medicare beneficiaries," said CMS Administrator Tom Scully. "We will also be conducting a national outreach and education effort to help beneficiaries better understand all the choices available to them, including the Rx discount card program this fall."

CMS will provide contacts and information to explain the cost-saving tools used by discount drug programs such as formularies, generic vs. brand-name drugs, and other ways beneficiaries can save on their prescriptions. Endorsed programs will also provide information to beneficiaries, including how to enroll and discounts available on drugs in each therapeutic class. This will be only one part of the full outreach effort that will provide information about traditional fee-for-service Medicare, Medigap options, Medicare+Choice and Medicare SELECT (where available).

A list of participating programs will be available at www.medicare.gov and 1-800-MEDICARE (1-800-633-4227), TTY/TDD: 1-877-486-2048 this fall. Beginning Oct. 1, 2001, 1-800-MEDICARE will be operational 24 hours a day, seven days a week.

A fact sheet on this subject is available at www.hhs.gov/news/press/2001pres/20010712a.html.

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