WASHINGTON WIRE

In this issue, you'll find:

• Medicare Part D Experiences Problems; States and Congress Offer Temporary Fix
• Proposed Rule Would Change Payment to Long-Term Care Hospitals
• State Legislation Targets Company Health Care Coverage
• The House of Representatives Remains in Recess

Top Story

Medicare Part D Experiences Problems; States and Congress Offer Temporary Fix

Since the initial implementation of the Part D Medicare Prescription Drug benefit on January 1, 2006, participating beneficiaries, pharmacists, drug plans and the Centers for Medicare and Medicaid Services (CMS) have faced a series of technical problems and access issues.

For example, pharmacies across the country have reported difficulty in confirming that dual eligibles (individuals eligible for both the Medicare and Medicaid programs) who were said to have been automatically enrolled in Part D, were actually enrolled in a plan. Due to a glitch in the Medicare Part D database, it appears that some of the dual eligibles were removed from the database and pharmacies were unable to reach providers to confirm coverage. As a result, some beneficiaries have been unable to receive their medications. In response to this problem, CMS has instructed insurers participating in Part D to provide beneficiaries with a 30-day emergency supply of medications, regardless of whether or not the medication is covered under their Part D plan.

Additionally, states are facing costs associated with temporary coverage for dual eligibles unable to afford the new Medicare copays or who are unable to access the appropriate prescriptions under their new Part D plan.

Legislation to correct some of the implementation problems is expected to be introduced soon. Senators John Rockefeller (D-WV) and Hillary Clinton (D-NY) plan to introduce the Requiring Emergency Pharmaceutical Access for Individual Relief (REPAIR) Act. The REPAIR Act would require a minimum of a 30-day supply of medications for beneficiaries, improve customer service, reduce the burden on pharmacies and provide reimbursement to states and beneficiaries for out of pocket expenses. The legislation would require that CMS directly provide compensation for any premiums, deductibles, and coinsurance that was in violation of Part D limits to beneficiaries and provide full reimbursement to states who paid for medications during this time. Currently, under the Medicare Modernization Act, the federal government cannot refund the states the out of pocket expenses incurred. Instead the federal government must pay the insurance providers and they in turn must pay the states. CMS has, however, offered to assist the states in compiling and filing claims with the insurance companies.

Additionally, Senators Norm Coleman (R-MN), Dianne Feinstein (D-CA), Frank Lautenberg (D-NJ), Charles Schumer (D-NY), and Olympia Snowe (R-ME), also plan to introduce legislation that would require the federal government to reimburse states for the cost of prescription drugs plus interest. The funds would be reimbursed by reducing the amount the state must pay the government. In addition, CMS would be required to post one employee at every State Health Insurance Assistance Program (SHIP) office to help beneficiaries with the new drug benefit.

America’s Health Insurance Plans’ President Karen Ignagni stated on Thursday that plans would reimburse the states for providing the emergency coverage. States will be reimbursed for incorrectly billed co-payments as well as paying the difference between the rate Medicaid may have paid and the new reimbursement rate.

Health Care News

Proposed Rule Would Change Payment to Long-Term Care Hospitals

On Thursday, January 19, 2004, the Centers for Medicare and Medicaid Services (CMS) announced a proposed freeze in 2007 Medicare federal payments to long-term care hospitals (LTCH). Generally, LTCHs are hospitals where an individual stays for 25 days or more. Such hospitals provide extensive medical and rehabilitative care to patients with multiple acute or complex conditions.

Compiled with recommendations from the Medicare Payment Advisory Commission (MedPAC), the proposed rule would maintain the current prospective payment system (PPS) rate of $38,086 in 2007. Additionally, CMS proposed payments revisions for the short-stay outliers (SSO), stating that such changes will lead to a more efficient payment system. However, given that this patient-type represents approximately 37 percent of LTCH PPS discharges, the budgetary impact on the hospitals could be substantial.

Finally, the proposed rule would adopt the rehabilitation, psychiatric and long-term care market basket as the measure of inflation for calculating the federal rate.

The rule will be published in the January 27, 2006 Federal Register and the public comment period will be open until March 20, 2006. CMS anticipates the final rule to be published later this Spring.

State Legislation Targets Company Health Care Coverage

On January 12, 2006, Maryland lawmakers passed legislation requiring companies employing more than 10,000 people to spend at least 8 percent of their payroll on health care or contribute to a state fund for the uninsured.

The bill, which targets the Wal-Mart corporation specifically, is now being replicated across the United States by more than 30 other states including Washington, Florida, Ohio and Georgia. Such states are currently conducting research and holding hearings on moving to "fair-share health care."

Wal-Mart officials state that the legislation unfairly targets the corporation. In addition, the retailer claims that the legislation will do little to control the costs of health care. However, proponents of fair-share health care believe that the failure of companies, such as Wal-Mart, to offer competitive and comprehensive health care packages for its employees, shifts the cost of health care to the consumer and to taxpayers.

Upcoming Events

The House of Representatives Remains in Recess

For More Information

For further information on any topics discussed or publications listed, or to get copies of anything mentioned in this alert, please call (202) 466-6550 and ask for the Legislative Practice Group.

Powers Pyles Sutter & Verville P.C. is a full service law firm specializing in health care and education law and located at 1875 Eye St., NW 12^th Floor, Washington DC 20006

© Copyright 2005, Powers Pyles Sutter & Verville P.C.

All rights reserved.