Settlement proposed in Medicaid/Part D case

Washington -- The tens of thousands of Medicaid beneficiaries who become eligible for Medicare's drug benefit each month soon will have new federal protections to ensure that they keep receiving their subsidized prescription drugs without delay.

The safeguards are the result of a proposed settlement of a lawsuit against the Bush administration that has been pending for more than two years. Two beneficiary advocacy groups filed the suit in April 2006 after Medicaid beneficiaries complained that they were encountering widespread problems when transitioning to the Medicare drug benefit, which launched in January of that year. Congress had decided that, in cases in which beneficiaries were eligible for both programs, Medicare would take on the responsibility of covering their drug needs.

In some instances, delays of a month or more at the Centers for Medicare & Medicaid Services in processing information from states meant that pharmacies had no record that a beneficiary was enrolled in a Medicare Part D plan. In other cases, the pharmacy knew the patient was enrolled but had no indication that the patient was considered low income. Instead of paying no more than about $3 for each prescription under Medicare's low-income subsidy system, some patients were suddenly expected to make co-payments of about $60 or more to receive their drugs.

The situation was potentially life-threatening for these Medicare-Medicaid "dual eligibles," some of whom had received Medicaid drugs at little to no cost, said Kevin Prindiville, staff attorney with the National Senior Citizens Law Center in Oakland, Calif. Along with the Connecticut-based Center for Medicare Advocacy, the law center filed the suit on behalf of 13 beneficiaries who had encountered transition problems.

Although none of the original plaintiffs appeared to have any serious health consequences as a result of the delay in receiving their prescription medications, Prindiville and his colleagues were concerned that other beneficiaries did.

"Luckily, a lot of pharmacists stepped in and just ate co-payments, or people's family members paid, so we didn't hear a lot of stories about people actually dying, but we were worried that there were stories that we weren't hearing," he said.

Under the terms of the settlement, CMS will process enrollment files received from states identifying new dual eligibles within one business day and will allow states to send this information more frequently. Under the current system, this process can take five weeks or more. The agency also will strengthen existing procedures aimed at continuing to provide subsidized drugs until enrollment discrepancies can be ironed out.

The proposed settlement in the case, which went before the U.S. District Court in San Francisco, must receive final approval from the presiding judge before taking effect. CMS, however, already is working toward implementing several of these policy changes, the agency stated.

Problems from the start

The lawsuit arose so soon after Medicare Part D launched because advocates immediately realized that the process of transferring the dual eligibles from Medicaid to Medicare for their drug coverage was becoming a disaster, said Gill Deford, director of litigation for the Center for Medicare Advocacy.

Lawmakers considered the more than 6 million dual eligibles to be some of the most vulnerable beneficiaries in federal health care, and so Congress insisted when it approved the drug benefit that CMS devise an automatic process to move enrollees seamlessly from one program to the other. Despite the agency's efforts, dual eligibles encountered delays right off the bat.

"Thousands of advocates around the country who were in touch with us were seeing desperate people and unbelievable problems that weren't getting solved," Deford said.

CMS will not provide comments on the proposed settlement until the court approves the agreement, said agency spokesman Peter Ashkenaz. But he noted that the lessons the agency learned soon after the launch of Medicare Part D already have led to positive policy changes, such as an instant enrollment option that pharmacists can use to discount drugs for a dual eligible when he or she is not showing up in the system.

"It is important to recognize that Part D was the biggest change to the Medicare program in 40 years," Ashkenaz said. "The first days of implementation, when this case was filed, presented many challenges."

Still, the Bush administration fought the lawsuit at first and attempted to have the case thrown out.

Getting the word out

Prindiville, the attorney for the senior citizen's law center, said the final proposed agreement represents a compromise for both sides. Both the law center and the Center for Medicare Advocacy will continue to work toward making Medicare Part D enrollment more of a truly real-time system that is not so prone to delays. But congressional action might be needed to complete that transformation, he said.

Physicians with Medicaid patients who are turning 65 should be aware of the settlement and should be able to refer any patients encountering problems filling their prescriptions to groups such as the local State Health Insurance Assistance Program, Prindiville said. Although the plaintiffs expect many of the enrollment delays to dissipate when the terms of the agreement are implemented, they anticipate that the new safeguards ensuring continued subsidies should help when the occasional problems arise for dual eligibles.

"The best advice physicians can give their patients is to tell them not to take 'no' for an answer," he said. "There's always an opportunity to appeal or to get some help to make sure that they get exactly what their doctors think they need."