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GOVERNMENT & MEDICINE
Senate Democrats unveil Medicare prescription drug plan
Under the legislation, pharmacy benefit managers or insurers would administer the Medicare prescription drug benefit.
By Gina Shaw, AMNews correspondent. July 23, 2001. Additional information
Washington -- As the Congressional debate over a patients' bill of rights hits a crescendo, Senate Democrats, looking to consolidate early gains from their takeover of the chamber, are setting their sights on the Medicare prescription drug issue.
In late June, Sen. Bob Graham (D, Fla.) and a bipartisan group of colleagues introduced the Medicare Reform Act, which includes a standardized outpatient prescription drug benefit that operates much like the PPO-style coverage offered in many workplace health plans.
All Medicare beneficiaries would be eligible to participate in the bill's voluntary drug coverage plan. Most beneficiaries would split the cost of their premiums with Medicare, but, based on a sliding scale, low-income seniors would get full premium coverage and those with "very high incomes" would pay higher premiums.
After paying a $250 deductible, participants in the plan would receive graduated drug coverage under a formula that supporters say is designed to "ramp up" to provide the most help to people with the greatest need. For each prescription above the deductible up to $3,500, Medicare would split the cost with beneficiaries; between $3,500 and $4,000 in out-of-pocket spending, Medicare would pay 75%. After $4,000 in out-of-pocket costs, a cap would kick in, and Medicare would pay the remainder of prescription drug expenses.
Controlling costs
What really sets the Graham bill apart from other prescription drug coverage legislation -- including President Bush's plan and a proposal co-sponsored by Sens. John Breaux (D, La.) and William Frist, MD (R, Tenn.) -- is its administration.
The benefit would be managed by private entities, such as pharmacy benefit managers and health insurers, who would be permitted to use the same strategies they now use in the private sector to control costs. Those methods include formularies, preferred pharmacy networks and generic drug substitution.
"The plan allows pharmacy benefit managers to assume some of the risk, so that if they actually realize savings, then it can come back to them," explained Caren Benjamin, Graham's press secretary.
Although the bill would require all pharmacy benefit managers to offer at least the standard benefit, Graham's office suggested that those PBMs receiving payments based on performance could channel those rewards back into reduced beneficiary cost sharing and lowering or waiving the deductible for generic 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," Graham said when he introduced the bill.
"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," he said.
How much would the new benefit cost? The Congressional Budget Office hasn't evaluated the legislation yet, said Benjamin, but a very similar bill introduced in the last congressional session by former Sen. Chuck Robb (D, Va.) was estimated to cost $318 billion. Because of minor differences in the two plans, Benjamin expects Graham's proposal to cost slightly less, between $308 and $312 billion.
Benjamin said chances for quick action on the bill look good. She noted that Sen. Max Baucus (D, Mont.), chair of the Senate Finance Committee, has said that he'd like to have a committee hearing and vote on the Medicare prescription drug issue by the end of July.
"I'm uncharacteristically optimistic that we can get a really good bill that looks something like this really good bill out of committee," Benjamin said. "We have the majority of Finance Committee Democrats already signed on."
So far the bill's only Republican co-sponsor is Sen. Lincoln Chafee (R.I.), but supporters are trying to recruit other GOP senators.
ADDITIONAL INFORMATION:
Weblink
Thomas, the federal legislative information service, for bill summary, status and full text of the Medicare Reform Act of 2001 (S1135) (http://thomas.loc.gov/)
Copyright 2001 American Medical Association. All rights reserved.