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Volume 27, Issue 460 |
February 6, 2006 |
STATES FILE LAWSUIT AGAINST THE “CLAWBACK”
By Christina Kent
The rocky start-up of the Medicare Part D prescription drug program is adding fuel to a lawsuit being brought by the Attorneys General of California, Texas, Kentucky, New Jersey and Missouri against the federal government.
At issue is the “phased-down state contribution” – payments that states must make to the Centers for Medicare & Medicaid Services (CMS) to help finance prescription drugs for “dual eligibles” (persons enrolled in both Medicare and Medicaid). The 2003 Medicare Modernization Act mandates that states make monthly payments to CMS to make up for the fact that Medicare, not Medicaid, is now paying for the dual eligibles’ drugs. The first payment is due February 25th.
But California Attorney General Bill Lockyer contends that what the states have named the “clawback” provision will end up costing California and other states more than they would have paid under the old system. The main reason: the base year (2003) used for the clawback formula did not account for pharmacy cost containment measures taken after 2003, resulting in an inflated 2006 clawback obligation. The clawback formula will force California to pay the feds $500 million in FY 2005-2006 and $1.3 billion in FY 2006-2007, Lockyer says. The state expects to incur a net cost of $72 million and $59 million in those years, respectively.
The lawsuit contends that the clawback provision is unconstitutional because it infringes on states’ legislative power by requiring them to pay for a federal program; imposes a tax on states; infringes on state sovereignty; and imposes an invalid condition on the receipt of federal funds. “This program may be profitable for drug companies, but it has been a disaster for seniors, and it threatens to be a nightmare for the state’s taxpayers,” Lockyear said.
During January, at least 27 states and the District of Columbia authorized using their own funds – at least for a short time – to pay for prescription drugs for the dual eligibles. Meanwhile, CMS stepped up with plans to reimburse states for those costs and to help ensure that the duals receive their drugs. (See this NCSL Web page for more.)
CMS officials calculate that in the coming years state payments will be reduced, which will result in significant net gains to the states. Plus, states will have additional savings in 2006: the new Medicare subsidies will help states pay for their state retiree benefits, and beneficiaries who are enrolled in state prescription assistance programs (SPAPs) may now have at least part of those costs covered by Medicare. (For a special report on how more than 20 states are supplementing Part D with their SPAPs, go to this NCSL Web page.)
Wyoming Continues “PharmAssist”
Meanwhile, not every state has experienced severe problems with the Part D start-up. In Wyoming, “it’s actually been going quite well,” said Sen. Charles Scott. “We had been prepared for problems with the dual eligibles, but even with a program of this magnitude, we’ve had fewer problems than we had expected.”
He added, “The feds have done much better than people ever thought in terms of getting private plans to participate in the program.” Part D was designed to lower drug costs by enhancing competition in the private market – and if the approach works as intended, it “may end up producing a very cost-effective program,” he said.
But Scott is leery of the clawback provisions. “We’re going to sit on the sidelines and cheer on Texas and the other people who are suing. The state governments have wound up as part of the roadkill as far as financing this.”
Meanwhile, Wyoming is continuing an innovative program that it developed three years ago to help residents obtain lower-cost drugs, regardless of age or income. The little-known but effective program also helps to improve drug safety.
Wyoming residents call a toll-free hotline to get a form to record the medications they take. The form is sent to PharmAssist, which is administered by the Wyoming Department of Health and the University of Wyoming School of Pharmacy. The caller makes an appointment for a one-on-one consultation with a pharmacist in one of five cities. The state pays the pharmacist $70 per consult, and the patient pays $5.
The patient and pharmacist review all the medications, looking for generic or less expensive alternatives to name-brand drugs. The pharmacist also looks for potentially harmful drug interactions and cases where a patient may be overmedicated. The patient takes the recommendations to his or her doctor for a final review.
In the first year, the program has saved each caller an average of $2,000 a year, or about $170 a month. That amount has dropped off slightly, as the people who first used the program tended to have multiple, expensive prescriptions. Tested in a pilot program, the program went statewide on July 1, 2004.
STATES AND FEDS SEEK TO IMPROVE QUALITY, REDUCE HOSPITAL-ACQUIRED INFECTION RATES
Governments are getting serious about paying for health-care quality improvement. Experts say that one of the most effective ways to improve health-care quality is to track and publicly report quality measures. The deficit reduction act just passed by Congress will reduce Medicare payment rates for in-hospital services by 2 percent if the hospital fails to report certain quality-related data. Previously, payment rates were reduced by 0.4 percent.
In addition, the act will reduce Medicare payments to hospitals in some cases when the patient acquires an infection during a hospital stay. Hospitals will no longer be reimbursed at higher rates for certain patients who acquire an infection during their hospital stay.
Meanwhile, states are charging ahead with their own efforts to improve quality by establishing quality reporting systems. At least six states – Florida, Illinois, Missouri, New York, Pennsylvania and Virginia – have passed laws mandating public reporting of infection rates. Similar proposals have been introduced in about 20 other states. In Colorado, a pending bill would require hospitals to report to the state health department three types of infections: those acquired during heart or orthopedic surgery and infections that occur when “central lines” have been inserted into large blood vessels. “The state would save $3 million a year just in Medicaid dollars,” co-sponsor Rep. Bob McCluskey told the Denver Post.
Hospital-acquired infections (HAIs) are a major public health problem in the United States. Each year, it’s estimated that two million infections occur, causing 90,000 deaths and adding $4.5 billion to the nation’s health-care costs, according to the Centers for Disease Control and Prevention (CDC).
Pennsylvania was the first state to begin publicly reporting information about HAIs. In 2005, the Pennsylvania Health Care Cost Containment Council (PHC4) reported that the 11,688 confirmed hospital-acquired infections in 2004 were associated with 1,793 deaths, 205,000 additional hospital days and $2 billion in added charges. Not all the hospitals reported data, noted Marc Volavka, executive director of PHC4.
Model Law
In an effort to help standardize the collection and reporting of HAIs, three professional societies have developed model legislation for states.
“The model legislation makes certain that state reporting systems are based on reliable data,” said Dr. Trish Perl, president of the Society for Healthcare Epidemiology of America, which along with the Association for Professionals in Infection Control and Epidemiology and the Infectious Diseases Society of America drafted the model law.
The model legislation would authorize state departments of health to work with experts to identify, report, prevent and control HAIs that occur in hospitals and other health-care facilities, using nationally recognized practices such as those developed by the CDC. State-sponsored reports could identify individual health-care entities, but the data could not be used in any civil litigation brought against the reporting facility.
NCSL has developed a listserve on state policies related to HAIs. Legislators and their staffs may sign up for it by sending an email to Kala.Ladenheim@NCSL.org.
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