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WASHINGTON (May 1, 2002) Senator Bob Graham, D-Florida, today announced a new plan to provide America's seniors with affordable prescription drug coverage. Graham was joined at a press conference in the Capitol by Senator Zell Miller, D-Georgia, who will be a co-sponsor of Graham's bill.
"This proposal covers all the bases it is universal, comprehensive, affordable and accessible. By providing seniors a real prescription drug benefit, we will give them one of the most effective treatment options available," said Graham. "The addition of a prescription drug benefit to Medicare is the most important reform we can make to the program." The proposal, which provides universal prescription drug coverage for all Medicare recipients, includes these elements: A $25 per month premium for drug coverage. An immediate benefit with no deductible. The government will pay at least 50 percent of the cost of a prescription, with no gaps or holes in coverage, with a $4,000 annual cap on out-of-pocket expenditures. This might be converted to a "co-pay" formula similar to that offered by private health insurance plans. There would be no premium or cost-sharing for beneficiaries with incomes below 135% of the poverty level. Premiums would be reduced for beneficiaries with incomes between 135-150% of poverty. Additional details are available in the attached fact sheet. The Graham-Miller initiative is supported by AARP. In a letter to Graham dated today, William D. Novelli, AARP's CEO and executive director, said: "In our view, this plan could provide real value to beneficiaries in protecting them against the high costs of prescription drugs. We want to work with you to assure that a prescription drug benefit is a permanent and stable part of Medicare and includes adequate cost containment measures." Graham's proposal builds on the legislation (S. 1135) that he filed last year. FACT SHEET The Medicare Outpatient Prescription Drug Act of 2002 The MEDICARE OUTPATIENT PRESCRIPTION DRUG ACT OF 2002 guarantees access to affordable prescription drugs for all Medicare beneficiaries. This legislation adds complete coverage -- with no gaps or limits -- of prescription drugs beginning in the first year the benefit is offered. Voluntary, Accessible, Integrated Coverage For All Beneficiaries While all beneficiaries are eligible for the new Medicare benefit, it is voluntary. The benefit is integrated into the Medicare program to ensure its availability to all beneficiaries; access is guaranteed in every region of the country. Comprehensive Standard Benefit With Fully-Defined Stop-Loss Protection Beneficiaries would pay a $25 monthly premium. Assistance would begin with the first prescription filled of the year - the Medicare program would pay an equivalent of at least 50% of the cost of each prescription up to the stop-loss level. A defined stop-loss benefit: after $4,000 in out-of-pocket expenditures, the Medicare program would pick up any remaining expenses, and the beneficiary would pay no coinsurance. Affordable For All Beneficiaries Beneficiaries with incomes below 135% of poverty would receive full assistance for their drug premiums and cost-sharing. Those with incomes 135-150% of poverty would pay a reduced premium on a sliding scale basis. Use of the Private Sector to Promote Choice and Competition Multiple private sector entities (such as pharmacy benefit managers, health insurers or pharmacies) in each geographic region would administer, manage and deliver the prescription drug benefit. To ensure the cost-effective provision of benefits and to provide maximum flexibility for PBMs, the PBMs would be allowed to use all of the methods they use in the private sector to manage costs. Beneficiaries in every part of the country would have access to coverage provided by PBMs that would not assume full insurance risk for drug costs. In this way, adverse selection and inappropriate incentives would be avoided. However, to ensure that PBMs pursue and are held accountable for managing costs, high quality beneficiary services, and improved health outcomes, PBMs would be required to put a substantial portion (or all) of their revenues at risk for their performance in containing costs and providing quality service. Requiring PBMs to share risk provides a middle ground between proposals that have included no risk being assumed by the private sector, and proposals that have required the assumption of insurance and selection risk for the cost of drugs. This arrangement would bring us the benefits of private sector competition without the instabilities that would be associated with a full risk-bearing model. It would take advantage of the fact that the private sector has provided an efficient, workable, stable system for the delivery of prescription drugs, and the management of drug costs, and would allow beneficiaries to choose between multiple vendors. Although all PBMs must offer the standard benefit at a minimum, payments received on the basis of their performance could be used to reduce beneficiary cost-sharing. Continuation and Expansion of Current Coverage Incentives to retain employer-provided coverage are included. Medicare HMOs (Medicare+Choice program) would be required to provide, at a minimum, the drug benefit established under this proposal. The MOD Act allows continued offering of Medigap plans, however the plans must be modified to compliment, and not duplicate the prescription drug benefit under this Act.