New Bill to Create Prescription Drug Benefit Through Original Medicare Comes As CMS Expansion of Off-Label Drugs for Cancer Treatment Draws Criticism

Yesterday, Congressional Democrats introduced legislation (HR 684, S 330) that would allow Original Medicare to establish one or more plans to compete with private plans under the Part D prescription drug benefit, according to CQ HealthBeat. The legislation would also require the Secretary of Health and Human Services to negotiate directly with pharmaceutical companies for the prices of medications under Part D.

Additionally, it would strengthen the ability of Medicare beneficiaries to appeal denials of coverage for medically necessary medications under all Medicare Part D plans.

The bill was sponsored by Senate Majority Whip Richard Durbin (D-Ill.) and Reps. Marion Berry (D-Ark.) and Jan Schakowsky (D-Ill.). According to Berry, the plans established by Medicare would have the ability to obtain discounts on medications that private plans could not match.

Rep. Schakowsky claimed:

"Under our bill, seniors and people with disabilities would finally be able to select a Medicare-operated drug plan that provides a guaranteed benefit without having to worry that their premiums will drastically increase or their access to needed drugs will drastically decrease each year."

Pharmaceutical Research and Manufacturers of America Senior Vice President Ken Johnson said that the group had begun to review the legislation and pledged to work with sponsors to help Medicare beneficiaries obtain medically necessary medications. Johnson added that:

"It's important to note, however, that the competitive market approach of the Medicare drug benefit is working well for patients and taxpayers."

Supporters of the bill disagree with this statement, including Medicare Rights Center, which has long advocated for the addition of a drug coverage option to Original Medicare. The organization claims, in its report The Best Medicine, that private prescription drug plans create higher costs, gaps in coverage, instability, and the danger of consumer confusion and marketing fraud.

Rep. Berry added that:

"If this works as we think it will, most of the private plans would drop out [of the Medicare prescription drug benefit]."

This comes as a Centers for Medicare and Medicaid ruling last fall allowing the coverage of drugs for off-label uses to treat cancer patients has begun to draw controversy. The New York Times reports that the new ruling changed the authority of drug compendiums.

Previously, Medicare representatives were supposed to consult compendiums and use their own discretion to interpret recommendations in determining coverage. Under the new ruling, the decision now is based only on the compendiums, "even when there is little clinical evidence behind a particular recommendation," according to The Times.

The problem with the new ruling, says The Times, is that there are possible conflicts of interest because "some of these new compendiums have close financial ties to the drug industry." Additionally, The Times reports that "it is hard to predict how much" Medicare spending on cancer drugs could increase as a result of the new rules because Medicare officials canceled a cost analysis of the changes.

It added:

"[The changes] seem almost certain to raise the federal drug bill," which could make it "more difficult for the new administration to rein in spending on unproven medical treatments."

Is the Medicare Advantage Program Really Advantageous?

CQ Politics reports that President-elect Obama is committed to the elimination of Medicare Advantage plans. Obama told ABC's "This Week" that Medicare Advantage plans are an example of cost-cutting government initiatives that do not work.

This is especially interesting in light of the Centers for Medicare and Medicaid Services ordering WellPoint to temporarily suspend enrollment and marketing efforts for its Medicare plans on Monday. The Los Angeles Times reports that the sanctions followed a "sharp" increase in complaints. Reportedly, some customers of WellPoint were unable to receive their prescription drugs while others were overcharged because of computer mistakes.

Along with President-elect Obama, Senate Majority Leader Harry Reid (Nev.) has signaled his intent to "scale back" the Medicare Advantage Program, according to The Hill. Medicare Advantage plans offer health insurance to more than 10 million of the 45 million Medicare benficiaries. However, the Medicare Payment Advisory Committee reports that Medicare Advantage plans cost the government 13% more per beneficiary on average than Original Medicare in 2008.

Democrats say that $15 billion of the annual $94 billion in subsidies granted to Medicare Advantage plans are the result of "overpayments."

Surely, any attempt to eliminate Medicare Advantage plans from the Medicare program will be met with fierce opposition from private insurance companies. In response to the threat of elimination, America's Health Insurance Companies said that the so-called "overpayments" are used to help purchase prescription drug coverage, vision care, and chiropractic services for which Original Medicare does not pay.

There may be some merit to this argument as Original Medicare is lacking in many crucial coverage areas, including dental services which left untreated can be fatal. Thus, it is quite possible that the elimination of Medicare Advantage plans could result in many seniors facing

reduced benefits, limited health care choices and higher out-of-pocket costs,

according to America's Health Insurance Companies.