Government refuses to reimburse states for the cost of drugs

States will now have to file claims with private drug plans.
Knight Ridder Newspapers
WASHINGTON -- The federal government won't repay states that are making emergency purchases for hundreds of thousands of poor, sick people whose new Medicare drug coverage isn't yet working, Medicare officials say.
Instead, those states must recoup the money from the private plans that began providing drug coverage Jan. 1 on behalf of Medicare.
Medicare administrator Mark McClellan said the new Medicare legislation was clear: "Under this program, we don't have the authority to pay states directly. People are in Medicare drug plans and it's the Medicare plans that are supposed to pay for the medications."
Complicated issue
That could create an administrative nightmare for the states that stepped up to safeguard the health of low-income elderly and disabled people whose Medicare coverage hasn't materialized because of administrative problems and poor planning by Medicare officials.
Now, those states will bear the cost of filing hundreds of thousands of claims with the dozens of private drug plans that provide Medicare coverage within their borders.
"That's going to be very complicated," said Arkansas Gov. Mike Huckabee, the chairman of the National Governors Association, who was frustrated and disappointed by the news.
"We're doing the federal government a favor. We're in essence loaning them money while they get their problems worked out. ... Now we're going to not only become the bank, but the collection agency? Next, we'll be manufacturing the drugs and selling them," he said Tuesday.
In New Hampshire, which has paid 814 claims so far, Pamela Wash, a spokeswoman for Gov. John Lynch, said state officials were examining the administrative costs and possible legal issues that could arise from a state seeking reimbursement on behalf of a federal program.
If states have trouble with the plans, Huckabee said, congressional action might be needed to get direct payment from Medicare.
"I think they should accept responsibility to fix it rather than asking us to bail them out. And then when we do, to say, 'Gee thanks. As far as paying for it, good luck, you're on your own'? That kind of defies the old good-neighbor rule. They borrowed our lawn mower and they gave us back a pair of scissors," Huckabee said.
Problems
Medicare's new prescription-drug benefit has been hobbled nationwide by a series of computer, phone, data and human errors that have left an estimated 1.28 million of Medicare's most frail beneficiaries unable to get the life-sustaining medications they need.
The problems stem from incomplete enrollment data, jammed phone lines, uninformed pharmacists, people being placed in drug plans that don't cover their medicines and others being charged incorrectly with exorbitant out-of-pocket fees.
Realizing that the affected patients have higher rates of disability, chronic disease, cognitive impairment and other problems, about 20 states have passed emergency legislation to purchase medications until the problems are resolved.
Last week, Medicare advised the drug plans to follow rules that require them to issue a 30-day supply of any drug a person was taking previously. Medicare also reiterated that these low-income people shouldn't pay more than $5 for each covered medication.
Democrats and Republicans alike on Capitol Hill have expressed mounting concerns about the problems, many of which lawmakers, health advocates and a recent report by the Government Accounting Office had predicted. The Senate Special Committee on Aging has scheduled hearings in February to sort out the problems.
Committee spokesman Demetrios Karoutsos said the lawmakers' worst fear was that a sick person would die or be hospitalized because he or she had gone without medication due to problems with the new program. "That's obviously a worst-case scenario," Karoutsos said.