2003-09-25 -- Medicare Prescription-Privatization update

**  House-Senate Conferees, mostly GOP, plan push to produce one
bill.

**  Bush wants already-failing Medicaid system to pay for drugs of
poor seniors and disabled.

**  Both Senate and House bills decrease outpatient cancer care funds.


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Congress Daily, September 25, 2003

Medicare Conferees Plot A Four-Week Drive To Completion

By Julie Rovner, With Emily Heil contributing

House and Senate leaders, in consultation with leaders of the Medicare
conference, have set an ambitious -- some say unrealistic -- four-week
drive to finish legislation enacting Medicare reforms and a
prescription drug benefit and will meet today with President Bush to
discuss their plans.

A group of mostly Republican House and Senate Medicare conferees met
Wednesday after House and Senate leaders decided to set Oct. 17 as a
deadline for an agreement on Medicare legislation.

The deadline "is a loose thing -- not fixed in stone," said House
Energy and Commerce Chairman Tauzin, emerging from the Wednesday
meeting. Tauzin warned while that date is "our goal-- it might be an
impossible goal to meet."

But leaders seemed to take the date more seriously. Hastert said
leadership of both chambers would be "monitoring" progress as the
deadline nears.

"We just need to get this done in a realistic time frame so we have
time to get it passed," Hastert said.

A four-week work schedule for conferees obtained by CongressDaily
calls for settling issues related to competition between health plans
this week.

Next week, conferees will take up drug benefit design issues,
including coverage of the low-income population and House-passed
provisions requiring higher-income beneficiaries to pay more of their
own drug costs before "catastrophic" coverage would begin.

Other second-week issues include cost containment, provider
payments, the structure of the new agency that would be created to
oversee the drug benefit and private plans, and "revenue" provisions,
including House-passed proposals to create new "Health Savings
Accounts" for the non-Medicare population.

Week 3, Oct. 6-10, calls for drafting, CBO scoring and continued
negotiations on "tier 2" issues such as speeding the generic drug
approval process and drug reimportation.

Week 4, Oct. 13-17, anticipates resolution of the two thorniest issues
in the measure: a House-passed proposal to have private plans complete
directly with government-run, fee-for-service Medicare, and a
Senate-passed plan to have the federal government provide "fallback"
drug coverage in areas where fewer than two private plans show up.

Republican conferees have been meeting behind closed doors with two of
the four Senate Democratic conferees, Finance ranking member Max
Baucus, D-Mont., and John Breaux, D-La.

House Ways and Means Chairman Thomas, the conference chairman, told
reporters he would welcome the participation of any other Democratic
conferees "committed to passing a bill within the confines of the
House or the Senate bill."

But even if conferees can resolve their differences, pressure
continues to build from outside the conference.

Bipartisan backers of a House-passed bill to make it easier to buy
drugs from Canada and other developed nations -- technically the House
position in the Medicare conference -- held a news conference to
threaten to vote against a final bill that lacks their provisions. The
FDA and the drug industry vehemently oppose the proposal.

The reimportation issue has been picking up steam in recent weeks,
even as the Medicare negotiations drag. Among those attending the
meeting was Democratic Illinois Gov. Rod Blagojevich, who ordered a
state study last week on the feasibility of purchasing Canadian drugs
for the state's 240,000 workers and retirees.

"This is, in the final analysis, not about safety," said Blagojevich.
"It's about money."

Democratic Gov. Tom Vilsack of Iowa announced similar plans this week.
At the news conference, Rep. Gil Gutknecht, R-Minn., author of the
House-passed bill, announced Minnesota's GOP Gov. Tim Pawlenty is
joining the list.

"State and federal officials have a moral responsibility to get
maximum value from taxpayer dollars," said Gutknecht. "I'm especially
proud of Gov. Pawlenty for taking a national leadership role for
states struggling with prescription drug costs that are out of
control."

Also joining the Medicare debate are oncologists. Fifty-three Senators
have signed a letter to Finance Chairman Grassley urging conferees to
drop provisions from both the House and Senate bills that would lower
what Medicare pays for cancer drugs and other medications administered
by doctors in their offices.

"Cancer caregivers will likely be forced to close satellite offices,
leaving patients in rural communities with long drives to and from the
cancer treatment they need," said the letter.


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Bush administration wants drug benefits for poor elderly and disabled
to be charged to already-overburdoned Medicaid funds.


New York Times, September 24, 2003

Senate Wins Support on a Medicare Issue

By ROBERT PEAR

WASHINGTON, Sept. 23 - The Bush administration has quietly told
Congress that it should not provide Medicare drug benefits to six
million poor elderly and disabled people because they are already
eligible for similar help through state Medicaid programs.

Administration officials said they were siding with the Senate,
against the House and all 50 governors, on one of the most divisive
issues in the Medicare legislation.

A major issue of principle and large amounts of money are at stake.
The principle, rooted in the history of Medicare, is that all benefits
are generally available to all beneficiaries, regardless of their
income.

Under the House version of the legislation, the new drug benefit would
be available to all 40 million Medicare beneficiaries, including 6.2
million who are also eligible for Medicaid, the insurance program for
low-income people.

By contrast, the Senate bill denies Medicare drug benefits to people
eligible for both programs. They would have to rely on Medicaid for
assistance with their drug costs.

Although states are not required to provide drug benefits under
Medicaid, all have chosen to do so. Medicaid has historically provided
extensive drug benefits, but they vary widely from state to state, and
in recent years states have reduced the coverage in an effort to hold
down soaring costs.

A senior administration official said he had told Congress that the
administration preferred the Senate approach. "We would rather spend
money to cover new people with new benefits, rather than substituting
federal dollars for state dollars," he said. "To spend federal money
on people who have reasonably good drug coverage does not seem like
the best use of the available resources."

Medicare is financed entirely by the federal government; Medicaid is
financed jointly by the federal government and the states. The
National Governors Association, AARP, Consumers Union and the Catholic
Health Association all say Medicare should pick up most drug costs for
low-income people that is now borne by states. "These seniors are
Medicare beneficiaries first and should be afforded equal access to a
new prescription drug benefit," said Gov. Jeb Bush of Florida, echoing
views expressed in a letter to Congress from all 50 governors.

States say that through Medicaid, they spend $7 billion a year on
prescription drugs for people covered by both Medicaid and Medicare.
Under the House bill, the federal government would gradually assume
these costs over 15 years. "We spend $43 billion over the next decade
picking up these low-income seniors," said a principal author of the
House legislation, Representative Bill Thomas, Republican of
California.

Administration officials call that process "buying out the states,"
and say it is a bad idea. The Senate agrees, and, as a result, its
bill can provide more generous subsidies to those low-income elderly
people who do not qualify for Medicaid.

Administration officials said they had not publicized their views
because they did not want to anger House Republicans like Mr. Thomas,
the chairman of a conference committee trying to reconcile the
Medicare bills.

Mr. Thomas said it was fair, equitable and logical to give elderly
poor people access to drug benefits through Medicare. "They should be
treated as seniors first, not as low-income first," he said.

Democrats agree. Senator John D. Rockefeller IV, Democrat of West
Virginia, said the new drug benefit should be universal, like other
Medicare benefits.

Representative John D. Dingell, Democrat of Michigan, said the
approach favored by the Senate's Republican majority and the Bush
administration could lead to "a two-tiered, second-rate drug benefit
for the lowest-income Medicare beneficiaries."

Executives of Catholic hospitals met on Monday with Thomas A. Scully,
administrator of the federal Centers for Medicare and Medicaid
Services. They said Medicare should be the main source of drug
coverage for people eligible for both programs.

The Rev. Michael D. Place, president of the Catholic Health
Association, said Mr. Scully had replied that because of the costs,
Medicare coverage of prescription drugs for this group "could well be
a stumbling block" to the passage of legislation.

Asked about the meeting, Mr. Scully declined to comment. "We're trying
to stay neutral in public," he said, "though we're privately telling
people our preferences."


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San Francisco Chronicle, September 25, 2003


Cancer care battle:
Prescription drug bill would reduce
Medicare reimbursements


Tucked in the Medicare prescription drug bill that is finally taking
shape in Congress is a lesser-known plan -- one that would cut by
about 30 percent the amount doctors are reimbursed for certain drugs,
primarily those used to treat Medicare cancer patients.

The government insists it's merely adjusting an inequity in the
system, but oncologists say the proposed cuts could be devastating.

"I really couldn't continue to treat those Medicare cancer patients in
the office," said John Keech Jr., who runs a small oncology practice
in Chico and is president of the Association of Northern California
Oncologists.

The dispute arises over the level of reimbursement doctors receive
from Medicare to pay for and administer chemotherapy and other
cancer-related drugs.

Created in 1965, when fewer prescription drugs existed and those that
did were less costly, Medicare does not pay for most prescription
drugs. However, there is an exception: It does cover 450 drugs, mainly
those expensive medications administered under the care of a
physician. The drugs are primarily related to cancer treatment, but
they also include life-saving medications for dialysis, hemophilia and
organ transplants.

Under the current system, doctors buy these drugs from wholesalers and
manufacturers at prices below the reimbursement rates set by Medicare.
The government calls the difference between what doctors pay and what
Medicare reimburses a wasteful practice in an already cash-strapped
system and wants to cut those rates by as much as 30 percent.

But doctors insist they aren't pocketing any extra cash. They argue
that Medicare vastly underpays for the cost of delivering those
drugs -- the nursing support, hazardous waste removal, clinic
overhead, etc. -- and that reducing the reimbursement will jeopardize
their ability to offer chemotherapy to their Medicare patients.

"It's not an idle threat that access will be cut. It's not an idle
threat than oncologists will go out of business," said Dr. Peter Yu,
an oncologist at Camino Medical Group in the South Bay. "We're kind of
running scared."

The cuts, which are designed to reduce Medicare funding by about $16
billion over the next 10 years, are included in both the House and the
Senate versions of the Medicare reform legislation currently being
hashed out in conference committee.

But in case Congress fails to act on the plan, the Bush administration
last month came up with its own proposal.

The proposal would employ one of four options to cut drug spending.
They include setting rates at the same level as private insurers,
discounting the drugs by 10 to 20 percent below what Medicare
currently pays, using market data to set prices or requesting bids on
the drug program.

The proposal is designed to save Medicare between $4.1 billion and
$27.6 billion over the next 10 years, depending on which option is
chosen.

The Centers for Medicare and Medicaid Services will take public
comments on the proposals until Oct. 14 before choosing a final
version. The law could go into effect as soon as Jan. 1, 2004.

Observers say the proposals at the very least would cut $500 million
out of the cancer program the first year alone. That translates into
about a $170 million increase in payments for practice expenses, or
the costs of delivering the drug, but an approximately $700 million
cut in drug reimbursements.

Medicare reimburses at 95 percent of what's known as the drug
industry's published average wholesale prices. But manufacturers and
wholesalers typically give doctors and pharmacies a much lower rate
than that listed price to get and retain their business.

Medicare admits its pricing system is flawed and needs to be changed.
In the meantime, Medicare officials say these excess payments are a
drain on taxpayer dollars.

"We don't believe that patients are going to lose access to care. What
we want to make sure of is that we're paying appropriately for the
services and drugs," said a spokesman for the agency.

The government admits that while it may overpay for the drugs, it
underpays doctors for administering the drugs. All the proposals under
discussion will both cut the drug reimbursement and pay the doctors
more for the expenses related to delivering the drugs.

According to the agency, the government in 2002 paid $243 million to
oncologists and $90 million to other specialists for administering the
drugs.

But doctors say the increased payment of about $170 million to cover
practice expenses won't offset the losses they will suffer from the
cuts. In a survey of 900 oncologists by the American Society of
Clinical Oncology, 53 percent said they would limit the number of
Medicare patients they treat and 19 percent said they would stop
treating Medicare patients entirely if the current Medicare
legislation passes.

Medicare officials don't think oncologists are struggling financially.
For example, the Medical Group Management Association, a professional
organization for medical groups, pegs the median compensation in 2002
for hematology/oncology specialists at $310,371 per year.

The proposed cuts would affect those drugs given in outpatient
settings, which is the way about 80 percent of cancer patients are now
treated. Doctors like Keech in Chico say the cuts would force them to
send patients to a hospital for care, which costs more and is more
disruptive to people's lives.

"What Congress is not seeing is that if I'm not able to treat these
people in my office ... the total cost to the Medicare health care
system is going to rise frighteningly," Keech said.

Medicare patients like Carol Bunn would like to continue receiving
chemotherapy for breast cancer at a Camino Medical Group clinic in
Sunnyvale. She said her ability to drive back and forth from
treatments and stay at home gives her some control over the disease.

As a retired registered nurse, Bunn said, she understands how the
system works.

"I know what goes into supporting a system that is safe," said Bunn,
70, of Cupertino. "You've got to put so much into the overhead. If the
bureaucrats don't understand that, then shame on them."