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5/21/2004

Confusion Surrounds Drug Discount Cards

Kate Traynor

With just days to go before seniors can begin using Medicare-approved prescription drug cards, the government is under pressure to make it easier for Medicare beneficiaries to obtain accurate information about the many plans available to them.

"Seniors are confused, frustrated, and angry," Rep. Henry Waxman, D-Calif., said yesterday during a hearing held by the health subcommittee of the House Committee on Energy and Commerce.

Waxman said that the toll-free telephone number for the program, 800-Medicare, "is either busy, or it doesn't seem to be of much help to seniors who can get through to it." He further charged that the program's Web site is slow and confusing and fails to provide accurate prices for drugs available through the card plans.

Waxman added that the information dearth extends beyond the Centers for Medicare & Medicaid Services (CMS) to local pharmacies that will be accepting the cards. "Seniors can't even get good information from their local pharmacist, because the local pharmacists don't know which cards they will be accepting and don't have any sense of what price they will be charging on June 1," he said.

Many of the deficiencies Waxman described were publicized in a recent Washington Post article that chronicled a health reporter's problems getting information about the program for her elderly mother.

For an enrollment fee of up to $30, eligible Medicare beneficiaries can select a single card program from as many as a few dozen local, regional, or national plan sponsors. Cardholders receive discounts on medication costs from pharmacies that participate in the plans. Low-income Medicare beneficiaries who sign up for a card will receive $600 toward the purchase of medications this year and next.

CMS Administrator Mark McClellan acknowledged that his agency was not initially prepared for the flood of telephone calls from seniors seeking information about the discount card plans, which began enrolling Medicare beneficiaries last month.

"We were expecting and had prepared for 100,000 to 200,000 calls per day," McClellan told the committee. "The first day of this program, we had over 400,000 calls....It exceeded the capacity of the phone systems."

"There were, unfortunately, callers who were dropped that day and people who couldn't get through," he said.

McClellan said he had read the Washington Post article "with a lot of concern."

"It turned out," he said, that "that reporter contacted us in those very initial days of the program when we were getting an awful lot of calls in and had not yet had a chance to respond to the constructive criticism we received" about the call center and Web site.

Over the past month, CMS has hired hundreds of customer service representatives to answer questions about the discount cards. McClellan said that peak waiting times for those who call the toll-free number are now 15 minutes or less.

Waxman cited media reports that drug-price information posted to the Medicare Web site "are going up or down like a yo-yo, with no apparent reason."

McClellan responded that CMS "has worked with card sponsors to ensure that the prices they've committed to us or posted on the Web site are prices they can assure will go to beneficiaries when they go to the participating pharmacies."

He added that prices for many drugs listed on the Web site have decreased as card sponsors learn what their competitors are charging and then lower prices in response. CMS updates pricing information every week.

"That's not to say there'll never be a price increase anywhere in the drug discount program," McClellan said. "There are price increases all the time in every part of our economy."

Card sponsors are permitted to raise the prices charged for drugs but can only pass on increases related to a product's average wholesale price or actual increases in the plan sponsor's costs. CMS plans to monitor drug pricing to prevent so-called bait-and-switch tactics.

As McClellan put it, plan sponsors "can't just increase prices because they got somebody enrolled in their plan, and they want to jack it up. They have to have a cost-based reason for the increase, and we'll be monitoring that."

An interim final rule in Wednesday's Federal Register gives the Health and Human Services Department's Office of Inspector General (OIG) the authority to impose a $10,000 fine for each instance of bait-and-switch or other actions that mislead or defraud a Medicare beneficiary.

CMS also has the authority to fine card sponsors, but only for actions related to noncompliance with operational issues within the program.

Not all illegal activity related to the card program is subject to CMS or OIG sanctions.

CMS warned last month that at least 13 states had reported that people posing as Medicare representatives have attempted to sell fake discount cards to seniors.

Illinois Attorney General Lisa Madigan issued a statement May 7 claiming that state residents had been contacted by swindlers claiming that they needed the beneficiary's personal and financial information to deposit the $600 low-income credit into the senior's account.

In Massachusetts, the Executive Office of Elderly Affairs in March warned participants in the state's prescription drug insurance program to beware of door-to-door solicitors and telemarketers claiming to be Medicare representatives and asking for credit and financial information to enroll seniors in the card plans. Georgia's Department of Human Resources has likewise warned that seniors in the state have been victimized by telemarketers and other solicitors posing as Medicare officials representing the card program.

CMS stated in April that it "has not identified any large-scale fraudulent drug card operations." The agency advised consumers that Medicare-endorsed discount cards cannot be marketed through unsolicited telephone calls or visits.