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NAMI E-News July 1, 2002 Vol. 02-81
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Medicare Outpatient Prescription Drug Program
On June 28, by a 221-208 vote, the House of Representatives approved legislation
(HR 4954) to add a new outpatient prescription drug to the Medicare program.
Passage of the Republican-backed bill followed a very sharp partisan debate. As
is being widely reported in the press, Congress and the Bush Administration have
both made adding a new voluntary prescription drug benefit to Medicare the top
health care priority for 2002. Despite this consensus, the two sides remain far
apart over the details. While both sides agree that any new benefit should be
voluntary, they disagree over how it should be delivered and how much money is
needed to finance such a benefit. Most congressional Democrats believe that the
new benefit should be part of the traditional Medicare program and administered
through the existing program, while President Bush and House Republican leaders
prefer an approach that would administer a drug benefit through private sector
plans.
The House-passed legislation (HR 4954) has an overall price tag of $350 billion
over 10 years. It also includes more than $30 billion in increased payments for
doctors, hospitals, home health agencies and Medicare managed care plans. This
includes a $2 billion in payments earmark for Medicaid Disproportionate Share
Hospitals (DSM) that serve low-income beneficiaries (including individuals with
severe mental illnesses). These "givebacks" are in response to ongoing concerns
expressed by providers about deep cuts in Medicare spending enacted in 1997 as
part of the Balanced Budget Act (P.L. 105-33). HR 4954 also includes a proposal
to establish a national commission on the future of Medicaid - similar to a
commission established in 1997 to examine Medicare. Such a commission would be
empowered to look into current challenges facing state Medicaid programs and
make recommendations on ensuring the long-term financial viability of the
program and the provision of appropriate benefits under the program.
House GOP Plan Relies on Private Coverage
Under the House-passed bill, Medicare beneficiaries would receive
prescription drug coverage through subsidies paid to private plans that offer
coverage to all beneficiaries (both seniors and non-elderly people with
disabilities receiving SSDI cash benefits). Under the legislation, the
government would not directly provide drug coverage, nor purchase drugs or
regulate prices. Instead, beginning in 2003 private health plans would be
expected to offer "drug only" coverage on top of the traditional Medicare
program. These private plans that offer drug coverage would be expected to pass
discounts on to beneficiaries based on the amount of the subsidy. The Centers
for Medicare and Medicaid Services (CMS) estimates that 95% of Medicare
beneficiaries would voluntarily sign up for such coverage, while the
Congressional Budget Office estimates that 89% would enroll.
Under the "standard coverage" for voluntary prescription drug plans set forth in
HR 4954, enrollees would pay the first $250 in annual prescription costs before
private insurance plans would cover 80% of drugs bills up to $1,000 and 50% of
the next $1,000. Enrollees would then have to pay all of the cost between $2,001
and $3,700, with Medicare plans paying all the cost after that. While HR 4954
does not set forth a specific monthly premium for participants, Republicans
leaders estimate that average monthly premiums would be about $33. HR 4954
contains subsidies for low-income Medicare beneficiaries. For persons with
incomes under 135% of the federal poverty level, the government would pay the
entire premium and all of the beneficiary's costs. For Medicare beneficiaries
between 135% and 150% of the poverty level, premiums would be reduced on a
sliding scale.
HR 4954 also contains provisions designed to encourage use of generic drugs and
would allow use of formularies by participating health plans. However,
beneficiaries could appeal decisions denying coverage of specific non-formulary
drugs (including atypical anti-psychotic medications and SSRIs). Health plans
providing Medicare prescription coverage would also be required to cover
multiple medications within therapeutic classes of medications such as atypical
anti-psychotics, mood stabilizers, anti-depressant and anti-anxiety medications.
This language would prevent a health plan offering coverage to Medicare
beneficiaries from limiting options to a single medication within a give class
of drugs. For their part, Democratic leaders are supporting an alternative that
would cost $800 billion over 10 years and would be administered as part of the
current Medicare structure through a new Part D.
House Debate Dominated By Partisan Exchanges
The debate in the House last week featured sharp exchanges about which plan
would do more to make prescription medications more affordable for Medicare
beneficiaries. Republican members asserted that their bill would do more to
control prescription costs and would require drug makers to negotiate discounts.
Democrats countered that the major cost-cutting provisions in HR 4954 could
backfire and drive up costs for state Medicaid programs. HR 4954 would waive a
federal rule requiring drug makers to offer their "best price" to state Medicaid
programs in the case of any discounts negotiated for the new Medicare drug
benefit - a change that the Congressional Budget Office (CBO) estimates would
reduce drug costs by $19 billion over 10 years.
The Senate plans to debate and vote on prescription drug legislation next month.
Senate Democratic leaders have made clear that they will use the debate to
highlight differences between the two parties. Whether an agreement can be
reached that is acceptable to both houses of Congress and the President is
unclear at best.
NAMI Position
In testimony submitted to Congress, NAMI has outlined a set of criteria by
which to measure alternative proposals in meeting the needs of Medicare
beneficiaries seeking coverage for the newest and most effective psychiatric
medications. Among these criteria are guaranteed eligibility for non-elderly
people with disabilities who qualify for Medicare as a result of being on SSDI
(i.e., eligible for drug coverage on the same terms as the elderly). Despite the
fact that press reports continue to report on this issue as "drug coverage for
seniors," 5 million of Medicare beneficiaries are people with disabilities under
age 65 (13% of the 39 million on Medicare). It is important to note that as many
as 25% of these non-elderly disabled individuals qualified for SSDI as a result
of severe mental illness. Further, 30% of the 5 million Medicare beneficiaries
with disabilities under age 65 have incomes below 100% of the federal poverty
level and 63% have incomes at or below 200% of poverty.
A second key criteria set forth by NAMI is adequate coverage for individuals
with very high drug costs. This is common for individuals with severe mental
illnesses who must take multiple combinations of drugs to deal with complex
symptoms or disabling side effects. HR 4954 includes an annual out of pocket
"stop loss" threshold of $3,700. A copy of NAMI's current position paper on
Medicare can be found below. This includes a statement of support for Congress
addressing the discriminatory 50% co-payment requirement for outpatient mental
illness treatment.
Action Requested
NAMI advocates are urged to contact their Senators and push for action
Medicare prescription drug legislation that meets the needs of non-elderly
beneficiaries with severe mental illnesses including:
 | terms and conditions that are identical to those for individuals over age
65, |
| affordable premiums, deductibles and cost sharing requirements, |
| adequate coverage for catastrophic drug expenses, and |
| a bar on the use of overly restrictive formularies that limit access to
the newest and most effective psychiatric medications (with adequate appeals
to ensure access to non-formulary medications). |
NAMI also supports passage of an amendment to lower the current 50%
co-payment requirement for outpatient mental illness treatment services
(bringing it into parity for all other outpatient services covered under
Medicare as called for S 841).
All members of Congress can be reached by calling the Capitol Switchboard at
202-224-3121 or by going to the policy page of the NAMI Web site at
http://www.nami.org/policy.htm and
click on "Write to Congress."
MEDICARE COVERAGE OF MENTAL ILLNESS TREATMENT
- NAMI strongly supports congressional efforts to modernize coverage of mental
illness treatment under the Medicare program - specifically to address the
discriminatory aspects of programs such as the 50 percent co-payment requirement
for outpatient mental illness treatment and a 190 day lifetime limit on
inpatient hospitalization. NAMI supports the following bills in Congress to
address these other inequities in Medicare: HR 599, S 841, S 690 and HR 1522,
- NAMI strongly supports bipartisan efforts in Congress to add a prescription
drug benefit to the Medicare program that provides adequate protections against
the high cost of medications, ensures eligibility for both senior citizens and
non-elderly people with disabilities on SSDI and does not administer benefits
through use of restrictive formularies.
Parity Under Medicare
Medicare coverage of mental illness treatment has remained virtually unchanged
since the program's inception in 1965. This coverage continues to impose
stigma-based distinctions in coverage between mental illness and other medical
treatment. Medicare beneficiaries must pay 50 percent of the cost of outpatient
mental illness treatment, as opposed to 20 percent for all other outpatient
services. Similarly, Medicare imposes a 190-day lifetime limit on inpatient
psychiatric hospitalization that is not imposed on all other inpatient
treatment.
NAMI strongly supports various bills now before Congress to address these
historic inequities in the Medicare program. Among these are HR 599 (Roukema), S
841 (Snowe/Kerry), S 690 (Wellstone) and HR 1522 (Stark) and urges the Bush
Administration and Congress to incorporate them into efforts to enact
comprehensive restructuring of the program.
Outpatient Prescription Drug Coverage Needed
Both President Bush and congressional leaders have pledged to make coverage of
outpatient prescription drugs part of the Medicare program. This issue has been
commonly framed as "coverage of prescription-drug benefits for seniors." Much to
NAMI's regret, few elected officials have discussed this popular issue in terms
of providing such coverage for the 1.3 million non-elderly people with
disabilities who are eligible for Medicare by virtue of having been on Social
Security Disability Insurance (SSDI) for a minimum of two years.
Later this year, Congress is expected to take up several competing measures to
add a prescription drug benefit to Medicare. All of these competing plans agree
on the need for any Medicare drug benefit to be universal (all Medicare
beneficiaries would be eligible for the benefit) and an entitlement. Further,
all of the competing plans include some type of "stop loss" coverage -
establishing a threshold above which all costs are covered (ranging from as low
as $3,500, up to $7,000 in competing bills).
The separate House and Senate bills vary widely on several critical issues: a)
costs and b) whether the program should be administered within the existing
structure of the Medicare program (generally favored by Democrats) or through
private sector plans (generally favored by President Bush and Republicans). On
the issue of costs, proposals vary from as low as $200 billion over 10 years, up
to more than $750 billion over 10 years. Because of the looming retirement of
the large baby-boom generation, putting off enactment of a drug benefit raises
the eventual costs by as much as 18% a year.
On the issue of program structure and delivery, a leading proposal authored by
Senate Democratic leaders would add a new Part D to Medicare would administer a
new prescription drug benefit through the existing Medicare structure. By
contrast, a proposal being pushed by House Republican leaders would direct
insurance companies and HMOs to offer prescription-drug coverage. This new
benefit would be enacted in conjunction with larger, systemic reform of the
entire Medicare program. Under this legislation, the government would not
directly provide drug coverage, purchase drugs, or regulate prices. Instead,
private health plans would be expected to offer a variety of options that would
include drug coverage integrated into Medicare as well as "drug only" coverage
added to the traditional Medicare program. These private plans would be expected
to pass discounts to beneficiaries based on a federal subsidy for the premium
costs for drug coverage. Other proposals would rely on Pharmacy Benefit
Management (PBM) providers to administer a new drug benefit and penalize
manufacturers that refuse to discount drug prices.
On the issue of restrictive prescription-drug formularies, most of the competing
congressional proposals attempt to respond to Medicare-enrollee frustrations
about access to the newest and most effective medications. Most proposals would
bar the establishment of a uniform national formulary for any class of
FDA-approved drugs. At the same time, each proposal either explicitly or
implicitly assumes that insurers will be able establish their own formularies
and each will have a process to allow beneficiaries to appeal decisions to deny
non-formulary drugs.
As part of the debate over Medicare prescription drug coverage, NAMI supports
the following principles:
| prescription drug coverage must address the underlying discrimination in
Medicare's existing, overall mental illness benefit, |
| the 1.3 million non-elderly persons receiving SSDI benefits (25 percent of
whom are eligible for SSDI because of a mental illness) must be eligible on
the same terms and conditions as elderly beneficiaries), |
| coverage should be a standardized with entitlement for all eligible
Medicare recipients, |
| coverage must be sufficient enough to pay for the most expensive drugs for
the treatment of severe and persistent mental illnesses and include "stop
loss" coverage, and |
| prescription drug formulary policies must adhere to a principle of open
access to the newest and most effective medications for serious brain
disorders such as schizophrenia, bipolar disorder and major depression. |
The NAMI E-News is an electronic newsletter delivering the
latest in federal action alerts, legislative and policy updates, and NAMI press
releases. Provided free of charge as a public service, the NAMI E-News is read
by more than 16,500 NAMI members, policymakers, federal and state legislators,
media, providers, health care policy experts, and others interested in improving
the lives of individuals with severe mental illnesses and their families.
Contributions to support the NAMI E-News are welcomed and can be made online
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payable to NAMI and send to NAMI, P.O. Box 79972, Baltimore, MD 21279-0972); or
through the Combined Federal Campaign (CFC #0538).
Currently, NAMI Members number 220,000.
Thank you.
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