Deal on Medicare drug plan at hand

A House-Senate committee forges an important but tentative compromise on prescription benefits. Some hurdles remain.

WASHINGTON - Members of Congress have tentatively agreed on a Medicare drug benefit that would cover 75 percent of a senior's prescription drug costs up to $2,200 a year.

The compromise, which was accepted by members of a House-Senate conference committee earlier this week, would offer assistance to 10-million people who have no drug coverage and ease prescription costs for many others.

The tentative plan will not be finalized by the conferees until the Congressional Budget Office determines how much the package would cost. Both the House and Senate also must agree to it.

Congress is expected to enact the new drug benefit and other changes in the Medicare program before adjourning in early November.

Tom Scully, the government's administrator of Medicare, said Wednesday the conferees have settled about 80 percent of the differences between the bills passed by the House and Senate earlier this year. He added that the still unresolved disputes are "bridgeable."

The design of the drug benefit was only one of many differences between the House and Senate bills that the conference committee was asked to settle.

Also at issue are drug reimportation from Canada, creation of medical savings accounts, reimbursement levels for health care providers and the role that local drugstores would play in dispensing the prescription drugs to seniors.

The proposed drug benefit, which was outlined by the conference committee staff Tuesday in a meeting of Senate Democrats, calls for 75 percent coverage of all prescription drug costs after an initial out-of-pocket expenditure of $270 per year.

The benefit would be suspended after an expenditure of $2,200, and catastrophic coverage providing 95 percent coverage would not kick in until the beneficiary's total spending reaches $3,600.

For this, seniors would pay a monthly premium of about $35.

Both the House and Senate provided for a $35-a-month premium. But the benefit design was different in the two bills.

The House proposed to pay 80 percent of drug costs up to $2,000; the Senate, 50 percent of drug costs up to $4,500.

Both bills had a so-called "doughnut hole," or a period during which beneficiaries would pay all their drug costs until catastrophic coverage begins. Catastrophic coverage would have started at a spending level of $4,900 under the House bill and $5,800 under the Senate version.

Although some Democrats viewed this benefit as too small, it was not expected to be one of the major issues that would cause Democrats to oppose final passage of the Medicare legislation.

Senate Democrats were, however, upset that the conferees had agreed to create direct competition between the fee-for-service Medicare program and privately managed care plans for Medicare beneficiaries by 2010.

"Seniors in Florida will be up in arms" about that provision, Sen. Bill Nelson, D-Fla., told the New York Times.

For seniors with incomes of up to 135 percent of the federal poverty level (or $12,123 a year), the conference committee's tentative agreement calls for the government to subsidize fully all premiums and deductibles. But these people would be asked to make a $2 copay for generic drugs and a $5 copay for brand-name drugs until their total spending reaches $5,000, when the government would begin paying 100 percent.

Under both House and Senate plans, the drug coverage would begin in 2006. But participation in the drug plan would be voluntary for all Medicare recipients.

One of the biggest stumbling blocks to final passage may be the manner in which the compromise was being negotiated.

Only two Democrats, Sens. Max Baucus of Montana and John Breaux of Louisiana, have been invited into the talks with the Republican leadership. Democratic Sen. Jay Rockefeller of West Virginia is known to be especially angry that he was excluded.

Republicans, meanwhile, were so pleased with their progress that they set a new deadline for themselves.

"We set a "glide slope' so we can have decisions by the end of the week," said House Speaker Dennis Hastert, R-Ill.

Scully, the Medicare administrator, was optimistic that an agreement would be reached soon. "There's a 95 percent chance a bill is going to happen," he told a meeting of the American Association of Health Plans.

Howard G. Phanstiel, CEO of PacifiCare Health Systems, said he expects the legislation also will revive the government's flagging Medicare+

"Congress is attempting to take on a tremendous but long overdue challenge to modernize Medicare," Phanstiel said. "We remain cautiously optimistic about the prognosis of this reform and the potential rebirth of a stable and viable partnership with government."

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