HAPs eNewsletter: April/May 2007

III. In the News
     CMS funding for SHIPs
     New Congressional Effort to Increase SHIP Funding to $1.00 per Beneficiary
     Medicare Trustee Report
     Medicare Part D Price Negotiation Bill Defeated
     Senate Finance Committee hearings April 11th, May 2nd, May 8th
     House Ways and Means Health Subcommittee hearing on May 3rd
     Advocates Asf for an End to the 2 Year Waiting Period for Medicare

IV. Helpful Information
     Release of Medicare Advantage and Part D Contract and Enrollment Reports
     2008 Call Letter for Medicare Advantage (MA) Organizations and Prescription Drug Plans (PDP)
     Draft update to MA enrollment and PDP enrollment guidance
     Clinical Trail Coverage Under Medicare
     2008 Medicare Advantage Payment Rates and Part D notification of Changes
     2008 Medicare Part D Payments and Costs
     CMS Prevention and Wellness Initiative

I. May is Older Americans Month!

The theme for Older Americans Month 2007 is "Older Americans: Making Choices for a Healthier Future." For more information on the history and designations for past years please see the Administration on Aging’s press release.

II. Conference Call Information

HAP's next conference call for the SHIP Network is scheduled for Wednesday, May 16th, at 3:00 p.m. Eastern Time. The topic of this call is Long-Term Care Insurance: Public-Private Partnership.

III. In the News

CMS funding for SHIPs
The Centers for Medicare & Medicaid Services (CMS) announced its continued funding for Medicare counseling through the State Health Insurance Assistance Programs (SHIP) on April 11, 2007. CMS provides grants to all 50 states, the District of Columbia, Puerto Rico, Guam, and the U.S. Virgin Islands. Each state receives a share of $30 million in grant funds, which are also allocated to Area Agencies on Aging and the Native American Aging Programs, to help bring personal assistance to Medicare beneficiaries at the local level.

SHIP grants are calculated in two parts:

the initial grant is distributed as a fixed award of $75,000 (although just $25,000 to Guam and the Virgin Islands) to each of the applicants.
the second portion is a variable sum based on the percentage of nationwide Medicare beneficiaries who live in the state, the proportion of the state's Medicare beneficiaries to the total state population, and the proportion of the state's Medicare beneficiaries who live in rural areas

In a press release announcing the grants, CMS acknowledges SHIP programs as a key part of Medicare's education and outreach efforts to educate beneficiaries about health insurance coverage, the Medigap and Medicare Advantage options, along with Medicare prescription drug coverage, and long-term care financing.

New Congressional Effort to Increase SHIP Funding to $1.00 per Beneficiary
Senators Blanche Lincoln (D-AR) and Susan Collins (R-ME) are circulating a “Dear Colleague” letter to members of Congress which seek to increase SHIP and aging network funding. A separate Appropriations request is being circulated in an effort to increase funding for Medicare counseling. Increased funds are sought for Area Agencies on Aging (AAAs) Native American aging programs, and SHIPs for fiscal year 2008. While the focus is on Part D efforts, the continued need for and reliance upon these programs for information on all aspects of Medicare warrants an adequate level of funding to meet beneficiary needs. Currently SHIPs receive $30 million in funding. The letters request increasing funding to $1.00 per beneficiary for a total of $43 million. The suggested allocation is $13 million additional (new) dollars to SHIPs to be distributed through the existing CMS formula, and the remaining $30 million to be distributed to State and Area Agencies on Aging (a third of SHIPs are operated by AAAs) and Native American aging programs based on the number of Medicare beneficiaries in their planning and service areas.

Last year the U.S. Senate Appropriations Subcommittee on Labor, HHS, Education and Related Agencies directed SHIPs and aging programs to submit a combined funding request. This year’s appropriation request reflects the Senate Subcommittee’s 2006 directive.

If you have any questions, please contact Deepti Sethi at dsethi@hapnetwork.org

Medicare Trustee Report
Every year the Medicare Trustees report to Congress on the financial and actuarial status of Medicare Parts A, B, and D. The Trustees released their 2007 Medicare Report on April 23rd.

SMI Trust
The Supplementary Medical Insurance (SMI) Trust Fund includes Part B which pays doctors' bills and other outpatient expenses, and Part D which pays for access to prescription drug coverage. SMI funding comes through beneficiary premiums and general revenues such as income taxes. Even though Part B costs are expected to rise as individuals utilize more outpatient services to meet their health care needs, funding for the SMI Trust is projected to be sufficient indefinitely. The reason for this is because current law automatically provides financing each year to meet next year's expected costs.

The Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 requires that the Medicare Report include a determination of whether the difference between total Medicare outlays (what Medicare is paying out) and dedicated financing for Medicare costs (such as premiums and payroll taxes) exceeds 45 percent of total outlays within the first 7 years of the projection period (2007-2013 for the 2007 Report). The MMA requires that an affirmative determination in two consecutive reports be treated as a "funding warning" for Medicare that would, in turn, require a Presidential proposal to respond to the warning and expedited Congressional consideration of such proposal.

The 2007 Report projects that the difference will surpass 45 percent in 2013 and therefore makes a determination of excess general revenue funding. Because the 2006 report also made such a determination, a "Medicare funding warning" is now triggered requiring the President to propose legislation that responds to this warning within 15 days of the submission of the Fiscal Year 2009 budget. Congress must consider the President’s proposal on an expedited basis. This requirement will call additional attention to Medicare's impact on the Federal budget.

Families USA has published a fact sheet with background information on this threshold and a critical look at the 45% trigger.

HI Trust
Part A costs are funded through the Health Insurance (HI) Trust Fund. The HI Trust Fund is financed via payroll taxes. According to the 2007 Medicare Trustee Report, the projected date of HI Trust Fund exhaustion is 2019. This is an extension of one year from the 2006 report. Insolvency is projected when tax revenue will be sufficient to pay only 79 percent of HI costs. These predictions depend greatly on projections of payroll taxes and health care costs, which fluctuate. A combination of tax increases and program reductions may mitigate these predictions.

In Retrospect and for Consideration Moving Forward
On April 25th, the House Ways and Means Health Subcommittee held a hearing on the 2007 Medicare Trustees Report. The CMS Chief Actuary Richard S. Foster stated that if managed care plans had been paying the same as Medicare fee-for-service (Original Medicare) it is likely that a funding warning would not have been triggered. In addition, he added that reducing managed care payments likely would have extended the date of Part A exhaustion by another two years. A slight change in Medicare payments can have a large impact on the differential between Medicare outlays and incomes.

Medicare Part D Price Negotiation Bill Defeated
Senate legislation (S. 3) to allow Medicare to negotiate prescription drug prices was defeated April 18. The legislation was an attempt to change the prohibition against negotiations by the Department of Health and Human Services (HHS) contained in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, which created the Medicare Part D drug benefit.

The legislation would have removed the noninterference clause from the Medicare prescription drug law and allowed the HHS Secretary to negotiate prices. It did not go as far as the House version (H.R. 4) passed Jan. 12, which would have required the HHS Secretary to negotiate drug prices in certain circumstances. The Senate version also included language that would have allowed the government to share certain drug pricing data with congressional research agencies, for the purposes of studying the program and providing oversight.

The Congressional Budget Office (CBO) Director Peter R. Orszag has said that negotiated drug prices would not produce vast cost savings for the Medicare program unless the government had the authority to establish a formulary or impose some pressure, such as regulatory actions against drugmakers who fail to offer significant discounts. Without these measures it is unlikely HHS could negotiate better drug prices than those currently negotiated by private prescription drug plans implementing the Medicare benefit. Please see the CBO letter to Senator Ron Wyden.

Even if the full Senate approved these measures, President Bush has warned that he will veto any bill that calls for government-negotiated prices.

Senate Finance Committee hearings April 11th, May 2nd, May 8th
The Senate Finance Committee has begun a series of hearings to examine different aspects of Medicare.

On April 11th, the Committee heard testimony on Medicare Advantage (MA), the Medicare managed care program, as it compares to Original Medicare. Statements and written testimony submitted for the hearing of April 11th can be found at the Senate’s website.

Witnesses included the Congressional Budget Office Director Peter R. Orszag, who pressed for requiring expanded health outcome reporting. Orszag stated that current reporting is not sufficient to provide enough information to gauge whether MA delivers more cost-effective services or better health outcomes than Original Medicare. Furthermore, private fee-for-service plans, the fastest growing type of plan, are exempt from many reporting requirements.

While equalizing payments between MA and Original Medicare has been suggested by some advisory bodies, many believe that plans would leave the program if there is a drastic reduction in the financial incentives. The result of this pullout would be less health plan choices for rural beneficiaries.

Another witness, Glenn M. Hackbarth, chairman of the Medicare Payment Advisory Commission (MedPAC) which advises Congress, has favored pay-for-performance programs for MA so that all plans are not paid equally regardless of their activities and outcomes. He also asserts that targeted subsidies can provide more efficient methods to serve beneficiaries who need additional benefits but cannot afford them.

A hearing on The Medicare Prescription Drug Benefit: Monitoring Early Experiences was held on May 2nd. The list of witnesses reveals a hearing geared towards exploring Part D from the perspective of those helping beneficiaries.

Kris Gross, Director of Iowa’s Senior Health Insurance Information Program (SHIIP), based in Des Moines, reflected the concerns of beneficiaries and those entrusted with assisting them through Part D’s various processes. Ms. Gross’s statement and testimony during the hearing highlighted the ongoing issues pertaining to premium withholding, Medicare Advantage (MA) marketing tactics, and the attention and time needed to resolve issues.

Vicki Gottlich, from the Center for Medicare Advocacy in Washington, DC, focused her testimony on the complicated appeals and exceptions process for accessing medications, the ongoing unresolvable issues (i.e, premium withholding issues) which originate in data transfer processes, the failure of various Part D plans to comply with current guidance and regulations, and CMS’s lack of enforcement.

Other witnesses highlighted ongoing issues from the pharmacy owner and pharmacist perspectives.

A follow-up hearing, Medicare Prescription Drug Coverage: Review and Oversight, was held on May 8th. Witnesses included representatives from CMS, the Social Security Administration (SSA) and the Government Accountability Office (GAO). The hearing explored how CMS enforces requirements spelled out in regulations and rules and to find out if the program is working the way it should within these parameters. SSA’s low income subsidy (LIS) enrollment efforts, pharmacy practices and terms of conditions within contracts between the pharmacy and the Part D plan, and premium withholding issues were also discussed.

Of particular interest was GAO’s Director for Health Care, Kathleen King’s discussion regarding the findings of a recent GAO report Medicare Part D: Challenges in Enrolling New Dual-Eligible Beneficiaries. For a brief overview, see highlights at. The report states that CMS’s process takes a minimum of 5 weeks to complete and often leaves beneficiaries without any drug coverage reflected on their records during this time. The result is difficulty in obtaining drugs since pharmacists and beneficiaries can neither identify PDP enrollment nor submit a claim for medications.

The report highlights that this impact is especially pronounced for those beneficiaries who enter Medicaid with Medicare Parts A and B already in place. CMS’s auto-enrollment of these new duals cannot be anticipated by the agency. However, beneficiaries who are already Medicaid eligible and are either aging into Medicare, or reaching the end of their waiting period for Medicare eligibility, are being enrolled in PDP before their dual-eligible status begins.

For those who are Medicare first, Medicaid second, CMS took the additional step of retroactively setting the effective date of coverage to coincide with Medicaid eligibility. This retroactive assignment allows beneficiaries to seek reimbursements from their auto-assigned PDP for any out of pocket drug costs they incurred during that time. CMS failed to inform beneficiaries until March of 2007 of this right. This notification is only being sent to those who are newly dual-eligible, however the ability to seek reimbursement applies to all duals who fall in this category whether they were auto-assigned before March 2007 or after.

PDPs are paid $90 per month per beneficiary for the retroactive coverage periods. In her statement Ms. King states that “CMS’s incomplete implementation of its retroactive coverage policy in 2006 means that CMS paid PDPs millions of dollars for coverage during periods for which dual-eligible beneficiaries may not have sought reimbursement for their drug costs.”

House Ways and Means Health Subcommittee hearing on May 3rd
The House Ways and Means Health Subcommittee held a hearing on May 3rd to address low income assistance programs within Medicare. The Hearing on Medicare Programs for Low-Income Beneficiaries examined both the Medicare Savings Programs (MSP) and the Low-Income Subsidy (LIS) for Part D. Opportunities to increase enrollment and expand eligibility in these programs were discussed. Simplification and streamlining of application processes, including changes to income calculations and adjustments to the asset test were discussed. Focus was also on the need for clearer notifications regarding eligibility, and allowing data sharing between IRS and SSA to better target outreach efforts. The HHS Office of Inspector General said in a November 2006 report that legislation is needed to allow for such data sharing.

Representative Lloyd Doggett (D-Texas) has introduced legislation (H.R. 1536) that allows the sharing of tax information for the purpose of identifying beneficiaries who may qualify for LIS and also reduces the asset test.

Representative Jason Altmire (D-PA) testified regarding his Relief and Elimination of the Medicare Enrollment Deadline Penalty (or REMEDY) Act, H.R. 1310. This bill delays implementation of the late enrollment penalty for 2 years (2006 and 2007), provides a system for distributing reimbursements to beneficiaries who may have already paid a late enrollment penalty, and eliminates the penalty altogether for beneficiaries who receive the LIS thus making CMS’s current 2007 policy delaying this penalty for low-income beneficiaries a permanent fixture of the program.

CMS Senior Adviser S. Lawrence Kocot stated that there was nothing that could be done through legislative action to help low-income beneficiaries and praised the existing program efforts and enrollment. Testimony focused on relationships with SHIPs and with HAP as a means of outreach.

Advocates Ask for an End to the 2 Year Waiting Period for Medicare
The Medicare Rights Center released a report profiling 21 disabled individuals and their efforts to receive Medicare benefits. Too Sick to Work, Too Soon for Medicare: The Human Cost of the Two-Year Medicare Waiting Period for Americans with Disabilities, reflects the plight of the 600,000 Americans with severe and debilitating disabilities that have no insurance and go without health care or into debt while waiting two years for Medicare coverage to begin. According to the report, approximately 7 million people under age 65 qualify for Medicare through severe and permanent disabilities. About 1.5 million Americans are in the two year Medicare waiting period. Twelve percent of them die each year while waiting for coverage to start.

IV. Helpful Information

Release of Medicare Advantage and Part D Contract and Enrollment Reports
CMS has a new section on its website regarding contract and enrollment data from MA and Part D plans. This information includes a plan directory (often limited to customer service representative 1-800 numbers), plan enrollment (by plan type, state, county), plan service areas, and an MA claims processing contact directory (not inclusive of all MA plans). These reports are not comprehensive and do not include information for all plans, nor do they provide contact information beyond the easily accessible customer service lines for all the plans listed. CMS updates the data by the 15th of each month.

2008 Call Letter for Medicare Advantage (MA) Organizations and Prescription Drug Plans (PDP)
The final call letter for Medicare Advantage Organizations and Prescription Drug plans to participate in Medicare Parts C and D was released on April 19th. In the introduction, Abby Block, Director of CMS’s Center for Beneficiary Choices, says the requirements for participation in Part D outlined in the call letter are designed to make these programs “stronger and more attractive to people with Medicare.” The desire to “encourage growth” in both MA and PDP markets means increasing enrollment and helping plans prepare for the 2008 contract year. CMS solicited comments prior to publishing the final call letter. Input from advocates resulted in stronger protections regarding home infusion drugs and vaccines.

Draft update to MA enrollment and PDP enrollment guidance
The draft updates to the MA enrollment guidance and PDP enrollment guidance are available on the Part D Enrollment Guidance page of the CMS website. HAP submitted comments to CMS regarding these drafts on May 7th. If you have questions regarding these comments, contact Deepti Sethi at dsethi@hapnetwork.org.

Clinical Trial Coverage Under Medicare
On April 10 CMS proposed a revised national coverage policy that would place various requirements on clinical research studies in order for Medicare to pay the costs of participating beneficiaries. The public comment period ended on May 10.

The “Clinical Research Policy” includes new requirements:

a showing of how the results benefit the Medicare population
a written protocol for the study
published results of the study
consideration for relevant subpopulations (i.e., whether the research study is designed to draw conclusions with respect to the Medicare population)

2008 Medicare Advantage Payment Rates and Part D notification of Changes
On April 2 CMS announced the of Calendar Year 2008 Medicare Advantage Capitation Rates and Payment Policies and the 2008 Notification of Changes in Medicare Part D Payment. The accompanying fact sheet summarizes these changes and new rates. Of particular note is the fact that Medicare Advantage rates will increase by approximately 3.5% in 2008.

2008 Medicare Part D Payments and Costs
CMS’s Abby Block circulated a memo on April 2 outlining 2008 changes in Medicare Part D payment. The deductible, initial coverage limit, and out-of-pocket threshold for the defined standard benefit for 2008, as well as copayment amounts for certain dual eligibles were updated. The notification contains a chart on page 4 with the updated values, including those for the deductible and maximum copayments for certain LIS beneficiaries. Other updates include updated benefit structure for the Retiree Drug Subsidy and changes in statutes regarding risk corridors.

CMS Prevention and Wellness Initiative
In April CMS launched the A Healthier US Starts Here tour. The objective of this latest bus tour is to promote the preventive benefits and services available through Medicare. The tour will last four months and will make stops at community forums and health events. For more information, see the tour toolkit, which includes publications, training materials, calendar, and a video.

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Past E-Newsletters as well as HAP Weekly Emails are available through the Archive.

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