States question new Medicare drug plan

Officials say U.S. law provides less help than their assistance programs


WASHINGTON - State officials say the new Medicare drug benefit provides less help to low-income elderly people than some state pharmaceutical assistance programs, and they are searching for ways to make sure state residents are not worse off as a result of the federal law.

More than 1.5 million people receive help with drug costs through local programs in 30 states, according to the National Conference of State Legislatures. The federal law has created great uncertainty in most of those states, posing a challenge for legislators who will soon convene in state capitals.

Four states - New York, New Jersey, Pennsylvania and Illinois - account for more than half the enrollment in state pharmaceutical assistance programs.

State officials face several questions: Should they keep their programs intact, eliminate them or revise them to cover gaps in the Medicare drug benefit? And what are the costs of the different approaches?

These officials, still struggling to understand the federal law, predict that many beneficiaries will be confused as long-standing arrangements are disrupted and replaced with private Medicare plans offering different packages of drug benefits under different sets of rules.

Moreover, state officials say that some low-income people might see their benefits reduced because the private plans are likely to cover fewer drugs than some state programs.

The federal law would offer drug benefits to all 40 million Medicare recipients, with extra assistance for about 14 million of those beneficiaries with incomes less than 50 percent above the federal poverty level.

But some state programs offer greater benefits with more liberal eligibility standards. The New York program, Elderly Pharmaceutical Insurance Coverage, or EPIC, is open to people with annual incomes of $35,000 or less and couples with incomes of $50,000 or less - about four times the poverty level.

Some state programs pay for almost any prescription drug and allow beneficiaries to use virtually any pharmacy. By contrast, state officials say, the Medicare benefit will be delivered by private plans that can establish lists of preferred drugs, known as formularies, and can steer patients to selected pharmacies.

Steven J. Rauschenberger, the assistant Republican leader of the Illinois Senate, said Congress had not paid enough attention to the efforts of states, which were years ahead of the U.S. government in responding to the outcry over drug costs.

Thomas M. Snedden, director of the Pennsylvania program, said he welcomed the expansion of Medicare but said he foresaw immense problems coordinating its drug benefit with the popular state program.

"Customers used to getting a prescription drug covered with a co-payment of $6 will now be told that they owe $100 because the drug is not covered by their Medicare plan," Snedden said.

On Nov. 26, just two weeks before President Bush signed the Medicare law, Gov. Edward G. Rendell of Pennsylvania, a Democrat, signed a bipartisan bill expanding the state pharmaceutical program, so enrollment will rise from 234,000 to 340,000.

In Connecticut, Matthew Barrett, a spokesman for the Department of Social Services, said the Medicare drug benefit could save the state millions of dollars. But, he added, coordinating benefits under the two programs will be "a complex endeavor," potentially confusing to beneficiaries.

Richard Kirsch, executive director of Citizen Action of New York, a liberal advocacy organization, said, "It's going to be incredibly difficult to meld Medicare and the state drug programs, and it's going to be almost impossible for many seniors to tell whether the new Medicare program or the state plans are better for them."

Republican members of Congress said the Medicare drug benefit had a significant advantage over state programs. It is envisioned as a permanent, guaranteed benefit, whereas states are free to curtail or abolish their pharmaceutical assistance programs, and some states have temporarily closed enrollment because of budget problems.

Moreover, congressional Republicans say, the local programs offer a patchwork of assistance that varies among states and has many holes.

One of the biggest questions is whether seniors enrolled in Medicare drug plans can turn to state programs for drugs that are not covered by their plan.

"If you are on the green pill but your Medicare plan pays only for the yellow pill, will you be able to turn to EPIC to get the green pill paid for?" asked Richard N. Gottfried, a Democrat who is chairman of the Health Committee in the New York state Assembly. "The private plans would probably see that as diminishing, or cutting into, their bargaining leverage with the drug companies."

Pharmacy benefit managers negotiate large discounts on certain drugs by promising to deliver large numbers of patients who will use those products.

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