Progress on Medicare drug card

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Progress on Medicare drug card
Also: Cancer care reimbursements to be cut $16 billion

By Kristen Gerencher

CBS.MarketWatch.com, August 6, 2003

SAN FRANCISCO (CBS.MW) - Lawmakers are starting to agree on a way to provide seniors with prescription drug cards to bridge the gap until a permanent Medicare drug benefit arrives, Congressional negotiators said.

With the 2004 election just around the corner, the Bush administration is aiming to have a temporary discount drug card program in place by April 1. Medicare won't pick up the tab for medications until 2006 as part of a broader reform effort that's still on the table.

"Completing work on the details of the prescription drug discount card is critical," House Ways and Means Chairman Bill Thomas (R-CA) said in statement. "The card will provide immediate savings for all seniors on their drug costs."

Eligible low-income seniors will receive $600 a year in additional assistance, but negotiators are still disputing whether they also will have co-pays when buying their prescription drugs.

Medicare beneficiaries are expected to save an average 15 percent by using the new card, about the same discount that some private drug programs offer.

Modest benefits expected

Many people already take advantage of savings cards put out by pharmaceutical manufacturers such as Pfizer and Eli Lilly and drug store chains such as CVS and Rite Aid. See full story.

But those cards haven't provided sufficient financial supplements for seniors, said Charles Inlander, president of the People's Medical Society, an advocacy group in Allentown, Pa.

"The bridge has been out there for a couple of years and it's obviously not enough for people or they wouldn't have to be considering a Medicare drug benefit," Inlander said.

In light of that, lawmakers should focus on crafting a full drug benefit, he said. "I'm concerned that what they're going to do is settle on some drug card benefit that will not be useful in the sense of real substantial savings, and use it as an excuse to haggle and haggle and not get a full benefit passed in the near future."

Most seniors likely won't receive significant relief with the temporary Medicare prescription drug card, and will have to wait until the more comprehensive and contentious legislation is passed, said Henry Aaron, a senior fellow at the Brookings Institution.

"The drug card could have some modest beneficial effect, but it is not going to, in a major way, deal with the problem the overall bill is meant to tackle," Aaron said.

Meanwhile, health experts urged lawmakers Wednesday to approve a Medicare bill that retains prescription drug benefits. About 6 million low-income Medicare beneficiaries stand to lose them under the Senate's version, according to the Center on Budget and Policy Priorities. See full story.

Cancer drug reimbursements to be cut

In a separate development, the prices Medicare pays for cancer drugs came under scrutiny after a new report suggested the federal government is paying too much for them.

As a result, the Bush administration is considering cutting cancer care reimbursements by $16 billion, or 30 percent a year over the next decade, according to the Community Oncology Alliance's estimates of data from the Congressional Budget Office.

Some doctors' groups claim the cuts would hurt a vulnerable population and cause many treatment centers to close. Medicare beneficiaries who are 65 and older comprise 60 percent of all new cancer diagnoses.

Dr. John Rainey, an oncologist in Lafayette, La., said doctors have to balance insufficient Medicare reimbursement on the services side with inflated reimbursement on the drug side to stay in business.

"We're grossly underpaid for the services that we render in terms of paying for our nurses, our equipment, our special offices where we administer chemotherapy," Rainey said. "We're reimbursed more for the cost of our drugs, but that money goes directly into services that are not being paid by (Medicare.)"

Inconsistencies in drug reimbursements -- some cancer therapies are reimbursed 300 percent while others are marked up only 1 to 2 percent -- add to the dilemma, he said. Rainey estimates the proposed cuts would cost him 66 percent of his income and force him to close three out of four satellite offices that serve a community of 250,000.

The government likely is justified in cutting cancer care reimbursements closer to market rates, but doctors who sell chemotherapy to patients likely won't have to stop practicing just because they'll lose some income, Inlander said.

The patient deprivation argument doesn't hold true, he said.

"What you're doing is taking a little bit of lining out of these guys' pockets," Inlander said. "Yes, they pay for needles and nurses, but they make a profit on that. Maybe they shouldn't be making a profit on the medication."

Whether a one-sided reimbursement adjustment makes sense is questionable, Aaron said. "You can make the situation worse by correcting the amount you pay for the drugs."

Kristen Gerencher is a reporter for CBS.MarketWatch.com in San Francisco.