WASHINGTON WIRE

June 11, 2004
Issue 18

In this issue, you'll find:

Senate Finance Committee Hold Hearing on Drug Discount Cards
Health Care Costs Continue to Rise, But at Slower Pace
CMS to Hold Open Door Forum on Medicare's Wheelchair Benefit
Hearings and Forums

Top Story

Senate Finance Committee Hold Hearing on Drug Discount Cards

On Tuesday, June 8, 2004, the Senate Finance Committee held a hearing to discuss beneficiary enrollment in the newly implemented Medicare Drug Discount Card program. The discount cards, activated on June 1, 2004, are set to provide savings for beneficiaries during the interim time period before Medicare's prescription drug coverage becomes available.

As reported in the June 4, 2004 Weekly Washington Wire, there has been considerable confusion over card selection and some health care observers have expressed concern over the program's low enrollment numbers. Testifying before the committee, Centers for Medicare and Medicaid Services (CMS) Administrator Mark McClellan stated that although almost 3 million people are currently enrolled in the program, over two-thirds of those beneficiaries were automatically enrolled by their Medicare managed care plans. Currently, only seven states have automatic enrollment programs; however, during the hearing several Senators and witnesses expressed interest in expanding automatic enrollment to every state.

In his opening statement, Ranking Member Max Baucus (D-MT) stated that the main problem with the drug discount card program is the abundance of choices available to individuals. (There are currently almost 70 different discount cards.) He claimed that the program has put the ideology of choice above the best interests of Medicare beneficiaries, creating a confusing and overwhelming enrollment process. Senator Kent Conrad (D-ND) stated his agreement and has introduced legislation that would reduce the number of cards to three in each region of the country.

Also testifying at the hearing was Robert M. Hayes, President of the Medicare Rights Center, the largest Medicare information and assistance source in the country. Mr. Hayes' testimony was critical of the program, citing confusion and questionable savings. He suggested six points of "essential reform" that he believed could improve the system. Included in those six suggestions were automatically enrolling low-income beneficiaries in the drug discount card program, removing the asset tests which he feels prevent older Americans from completing applications, and federalizing the enrollment process for the low income drug benefit to remove administrative and differing state barriers to participation.

Senate Finance Committee Chairman Charles E. Grassley (R-IA) expressed his frustration with continual criticism of the program. He accused those originally opposed to the Medicare law of deliberately attempting to discredit the program.

Health Care News and Publications

Health Care Costs Continue to Rise, But at Slower Pace

According to a study released this week by the Center for Studying Health System Change, U.S. health care spending rose 7.4% for the privately insured person in 2003, compared to a 9.5% increase in 2002. While the rate may have slowed down, it is still twice as fast as the overall world economy.

Hospitals continued their upsurge, raising their prices 8% overall, the highest increase in the past 6 years of consecutive increases. Some observers attribute the rise in prices to improved quality of care. Opponents claim the rise can be blamed on the powerful networks of hospital mergers with better bargaining influence with insurance companies.

Outpatient spending, on the other hand, increased by the most of the surveyed categories, rising by 11% compared to 12.9% in 2002. Inpatient spending increased by 6.5%, compared with 8.4% the year before. However, hospitals are anticipating increased payments by Medicare as stated in last year’s legislation thereby possibly lessening their need to seek higher reimbursement from private insurers to cover costs.

For the third year in a row, physician services spending was the slowest growing category. In 2003, spending increased by 5.1%, down from the 6.5% increase in 2002. Although not directly attributable to reduced spending on physician services, the modest increases in physician reimbursement as a result of the Medicare bill may play an impact. The Medicare law increased physician reimbursement by only 1.5% in 2004 and again for calendar year 2005. CMS and other health care observers are projecting a substantial decrease in physician payment in 2006 when the statutory increases expire, forcing CMS to abide by what many consider to be a flawed payment formula.

Although not a surprise to many observers, spending on prescription drug increased by 9.1% in 2003. It increased by 13.2% in 2002. Reasons speculated to the decrease include the rise of generic drug use, an increase of cost sharing by patients, and expired patents.

CMS to Hold Open Door Forum on Medicare's Wheelchair Benefit

On Monday, June 14, 2004, CMS plans to hold a Special Open Door Forum to discuss clinical recommendation for its wheelchair, power wheelchair, and power operated vehicle (POV) benefit. For years, although even more so recently, disability consumer groups have expressed their discontent with Medicare's "in the home" restriction, interpreted to cover power wheelchair and POVs only for use in the four walls of the beneficiary's home. However, with the continual increases in Medicare's payments for power mobility, CMS has, up until now, been reluctant to reconsider their coverage criteria.

Monday's forum represents a possible first step toward a reinterpretation or reconsideration of Medicare's power mobility benefit. CMS is expected to introduce a newly formed "interagency wheelchair work group" as well as begin dialogue with clinicians and advocates on how it might best structure this benefit. The forum will be held from 1:00 to 5:00pm in the Hubert H. Humphrey Building, Room 800, 200 Independence Ave, SW, Washington, DC. For more information on the forum please visit www.cms.hhs.gov/opendoor.

Upcoming Events

Hearings and Forums

Monday, June 14, 2004

Special Open Door Forum: Clinical Guidance for Wheelchairs, Power Wheelchairs, and Power Operated Vehicles
1:00pm - 5:00pm
Hubert H. Humphrey Building - Room 800
200 Independence Ave, SW
Washington, DC

Tuesday, June 15, 2004

Committee on Health, Education, Labor, and Pensions-- Subcommittee on Substance Abuse and Mental Health Services
10:00AM
430 Dirksen Senate Office Building
Hearing - Providing Substance Abuse Prevention and Treatment Services to Adolescents

Thursday, June 17, 2004

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.

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