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House-Senate Negotiators Reach Agreement on Medicare Prescription Drug Legislation

As is being widely reported in the press, House and Senate leaders have reached an agreement on legislation to add a new prescription drug benefit to the Medicare program. Details on the legislation are beginning to emerge; however, the full text is not yet available. The new benefits for prescription drug coverage and protections for vulnerable, low-income beneficiaries (including those dually eligible for both Medicare and Medicaid) appear to be a major improvement over the status quo and previous congressional proposals. As a result, NAMI has sent a letter to House and Senate leaders urging members to vote in favor of passage later this week.

Details of Proposed New Medicare Drug Benefits Still Emerging

While House and Senate negotiators and the White House have reached an agreement on

Medicare prescription drug legislation, the final bill is still being written and scrutinized to determine its final cost over the next 10 years. Republican leaders and President Bush hope to get the bill passed before Congress adjourns prior to the Thanksgiving holiday.

Several key provisions of concern to NAMI are beginning to emerge. For example, the bill allows beneficiaries dually eligible for both Medicare and Medicaid to eventually access the new Medicare drug benefit (as opposed to current Medicaid coverage). More importantly, the final agreement will allow states to use their Medicaid programs to supplement or "wrap around" what is expected to be a modest Medicare benefit that includes both deductibles and cost sharing, as well as a gap in coverage for annual drug costs between $2,200 and $3,600.

The new program – which will not go into effect until 2006 – does contain many limitations. Beginning in the spring of 2004, discount cards would become available for Medicare beneficiaries as an interim measure until the benefit becomes effective. Once operational, the new program would be administered by private plans operating within geographic regions. The federal government would be allowed to use incentives to ensure that multiple plans are available in each region. While health plans would be able to contract with Pharmacy Benefit Managers (PBMs), there are provisions allowing beneficiaries to appeal adverse coverage decisions resulting from a restrictive formulary. NAMI is also pushing for language in the final agreement that would require plans to take into account the special needs of beneficiaries with severe mental illnesses.

Each plan would have a $275 annual deductible and (on average) a $35 monthly premium. Coverage would be for 75% of drug costs up to $2,200. Catastrophic coverage would go into effect once annual costs exceed $3,600. Despite these limitations, this legislation does represent an improvement over the status quo that leaves many Medicare beneficiaries with mental illness with no drug coverage at all.

For low-income beneficiaries (those below 135% of poverty) there are protections that would either eliminate or severely limit co-payments above the catastrophic limit. More importantly, the conference agreement contains specific protections for Medicare beneficiaries dually eligible for both Medicare and Medicaid – including those with severe mental illness. This includes allowance for states to use their Medicaid programs to cover gaps in the new Medicare drug benefit – including all deductibles and cost sharing, as well as the gap in coverage between $2,200 and $3,600 of costs. Cost sharing for those below 100% of poverty would be strictly limited.

Click here for a summary of the House-Senate conference agreement on the Medicare drug bill

Click here to view the NAMI letter sent to Senator Frist

Click here to view the NAMI letter sent to Speaker Hastert

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