HealthBiz: Medicare drug list delivered

By ELLEN BECK, United Press International  |  Jan. 4, 2005 at 3:55 PM
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WASHINGTON, Jan. 4 (UPI) -- The New Year means crunch time for insurers, pharmacy interests and the Centers for Medicare and Medicaid Services as regulations for the Medicare prescription drug benefit are put into place. The process of selecting health plans that will participate in the drug benefit, as well as preferred provider organizations for general health coverage, will have to be in full gear by spring to meet the 2006 start date.

A key element is guidelines on what drugs plans participating in Part D should include in their formularies. The guidelines, created by U.S. Pharmacopeia, have been delivered to CMS, which will make final decisions on how to use the data.

"The model guidelines are not a formulary," Pharmacopeia's Chief Executive Officer Roger Williams told reporters Tuesday in explaining the final draft.

CMS will, however, use the guidelines in assessing drug plan applications. The applications must spell out the sponsor's formulary -- the list of drugs that will be covered.

The guidelines likely will be a "safe harbor" of sorts. Plans following the guidelines, including at least two drugs per category or class unless only one drug exists, increase their chances of acceptance by CMS. The final draft includes 41 therapeutic categories and 137 pharmacologic classes.

USP's final draft went beyond its initial offerings by including additional information for CMS on drug types, which USP general counsel Susan de Mars said would prove "useful in the formulary review process," alerting CMS to ask for an explanation if a plan excludes a specific medication.

For example, one category is Inflammatory Bowel Disease Agents. Next to it under classes are Glucocorticoids, Salicylates and Sulfonamides -- the types of drugs available sorted by the mechanism of action or how they work. In a third column, entitled Additional Information, it reads: "See Antibacterials Therapeutic Category for similar/related therapies." That extra information alerts CMS that the plan applicant should have included other options.

The revised guidelines -- which take into account industry comments and deal with situations in which only one drug is available -- are generally acceptable to insurers, as well as pharmacy benefit managers, who likely will handle the lion's share of administering the Medicare drug benefit.

"We believe the model formulary guidelines represent a workable approach that will assure Medicare beneficiaries access to the medicines they need," Phil Blando, vice president of the Pharmaceutical Care Management Association, the industry arm for PBMs, told UPI's HealthBiz.

The guidelines are more expansive than what usually is found in a drug formulary in commercial markets, but PBMs still will be able to develop cost-saving plans based on the USP's final draft.

America's Health Insurance Plans President Karen Ignagni referred to controversy over the pharmaceutical industry's desire to have even more drugs included in the guidelines and said: "The final model continues to provide needed flexibility by not expanding the number of categories and classes previously proposed."

USP periodically will update and revise the guidelines.


A Washington area company, DecisionPath Consulting of Gaithersburg, Md., has won a nearly $1 million contract with the Social Security Administration to help ensure the Medicare Modernization Act application process for seniors is efficient and cost effective. That's important because the total cost of the MMA is expected to be well over the $395 billion Congress allocated over 10 years.

DecisionPath is to develop requirements and design a system for Social Security to use to measure MMA performance. Charles Kaplan, director of marketing, told HealthBiz a lot of the information needed to do that "resides in a black hole" of sorts and must be put into a format that is "clean and easily accessible and can drive business decisions."

Kaplan said the company focuses on providing data warehousing and business intelligence to help "drive cost out of processes."


It appears non-profit hospitals, lead by the American Hospital Association, are winning their battle against a set of insurance-related class action suits. The suits, filed nationwide, alleged the facilities abused their tax-exempt status by providing discounted care via insurance contracts to regular patients but not to uninsured patients.

The spate of suits was started by Mississippi attorney Richard Scruggs, who also named the AHA as a defendant.

AHA reports a federal judge in Colorado has dismissed all claims against Catholic Health Initiatives, Centura Health and the AHA and criticized the plaintiff attorneys for "seeking to use this court as a forum to reform the health care system."

AHA also said plaintiffs in a Louisiana case have voluntarily withdrawn similar claims filed against Christus Health and the AHA.

Meanwhile, the Centers for Medicare and Medicaid Services has issued a Q&A advisory on offering discounted healthcare services to the uninsured. CMS said hospital discounts given to non-Medicare patients -- as the uninsured would be -- have no effect on Medicare payments and therefore do not put the hospital's Medicare status at risk.


Most of the recent media attention has gone to President Bush's proposals to privatize Social Security but Democrats are not letting down their guard when it comes to changing the financing of the largest healthcare entitlement program on the books.

"I think it's clear that Senator Baucus and the Democrats are already gearing up for a fight, in that there is no support for any sort of movement towards block grant or even consideration to major cuts to the programs this time," Alice Weiss, healthcare counsel for the Senate Finance Committee Democrats, told a media briefing held recently by the Alliance for Health Reform.

Some Republicans have long wanted to cap the federal government payment for Medicaid, a program that now serves more than 50 million people and, in 2004, overtook Medicare in annual spending at more than $304 billion.

A letter signed by 48 Democrats was sent to the White House, said Weiss, opposing any plans to change the matching payment financing structure of Medicaid in which the federal government matches what states spend.

Weiss said if the Republicans head down the block grant road "I think its going to be a pretty messy and a difficult fight."

She added, however, opposition to block grants does not mean Medicaid doesn't need some help. She said the Democrats just feel "the program needs to be talked about in the proper legislative context."

Medicaid is on the radar, however, at the Centers for Medicare and Medicaid Services. Look for an even greater focus on intergovernmental transfers in 2005 -- creative and sometimes illegal ways states shift money around to qualify for the federal Medicaid match. CMS is talking fraud charges for offenders.



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