N.H. legal fight looms over baffling Medicare drug plan

Medical providers in New Hampshire say the new Medicare Part D drug benefit — passed to much acclaim in 2003 — is poorly planned to the point of chaos, with time running out for a smooth Jan. 1, 2006, program launch.

The state faces a massive problem getting 180,000 recipients up to speed on the benefit plans open to them. Worse, the change seems headed for a lawsuit between the state and the feds over an alleged unfunded federal mandate of $40 million or more. That burden would fall on state taxpayers.

The dispute centers on 20,000 recipients covered by both Medicaid and Medicare. Rep. Alida Millham, R-Gilford, a former home health director, said many of these dual-eligible patients take five and six medications. Some may not appear on the Medicare payable-drug formulary.

“They won’t have access to all the same drugs Medicaid pays for,” Millham said. “There will be a crisis for some of these people. Somebody will have to take care of that.”

Bettyann Salchli runs the Arches in Northfield, an assisted living center for people with dementia. She said the complexities of Part D might overwhelm the children of her patients.

“The sons and daughters are still raising their own kids, caring for their parents and trying to multi-task to the point of making quick decisions,” Salchli said. “I can see them throwing out the Medicare literature when it comes. Some don’t know the difference between Medicare and Medicaid.”

People will hear those terms a lot soon. Medicare is a federal health insurance program for people over 65 and for individuals with disabilities. Until now the entitlement has been blind to a person’s income and assets. Starting Jan. 1, it will offer different drug plans for different income levels.

Medicaid is a federally aided but state-administered program that provides medical benefits for low-income people. It has a long drug formulary and gives prior authorization for additional medications.

Medicare recipients start signing up for the drug benefit Nov. 15. The state is organizing a huge network of counselors and agencies to help them make key decisions about their health and wallets. A Medicare brochure optimistically promises, “If you sign up by December 31, 2005 your coverage will start on January 1, 2006.”

But Rep. Jim Pilliod, R-Belmont, calls Part D bewildering – and he’s a physician who helps to make laws.

“Even Medicare admits it’s incomprehensible,” he said. “I understood it worse after listening to one of their experts from Atlanta.”

Heading for trial?

Russell Keene, chief executive officer of Androscoggin Valley Hospital in Berlin, said better access to drugs would keep some seniors out of the emergency room.

“Many people have been unable to buy their meds in the past,” he said. “Nobody has their arms around this program yet. It can be very confusing.”

The feds are pitching Part D as a good deal for the states. New Hampshire will pay 90 percent of the federal cost for the dual-eligible people and can stop buying their meds.

But Senate Finance Committee Chairman Chuck Morse, R-Salem, calls that an illusory 10 percent savings. He said New Hampshire has teamed with others to pry a 22 percent discount from drug makers, meaning that the state’s Medicaid program offers better drug coverage than Medicare for at least $40 million less.

In other words, the new drug benefits plan will cost New Hampshire $40 million more than it currently pays.

“The (New Hampshire) Senate took that money and put it in the Rainy Day Fund,” Morse said. “It’s obvious no states should be paying that (difference). We want a (federal) constitutional ruling on it. The only way to get at that money is if the Legislature unlocks the budget.”

Rep. Peter Batula, R-Merrimack, chairs the House Health and Human Services Committee and thinks the dispute will go to trial.

“We’ll take legal action to keep the money if the feds demand it,” he said.

Jim Monahan, a lobbyist for the New Hampshire Association of Counties, hopes Medicare expands its drug formulary.

“They’re revisiting it,” Monahan said. “Our association is watching this whole thing closely. Right now our focus is on getting the word out to patients what their options are.”

Confusion awaits

Senate Majority Leader Bob Clegg, R-Hudson, advises any Medicare patients on Medicaid to stick with Medicaid. The co-payments and deductibles are better than Medicare’s, he said, and the drug list is longer.

“The state-supported program (Medicaid) is more comprehensive,” Clegg said. “If you take Part D, and it doesn’t pay for one of your drugs, you don’t get it.”

Clegg said the state’s drug cost has been limited to an 8 percent-a-year increase since 2003, thanks to cost-cutting. Medicare used that year as the benchmark to project what the drug benefit will cost now, but used a 17 percent federal inflation rate.

“Drug manufacturers put forward this piece of bureaucratic legislation to get higher profits for their shareholders,” said Clegg.

Rep. Neal Kurk, R-Weare, said a number of states have made similar improvements to their drug programs.

“They’ve made savings and won’t get the benefit of them,” he said. “Some states are already suing over it.”

Greg Moore, spokesman for the state Department of Health and Human Services, confirmed the state loses in the short term. But its cost share drops to 75 percent in a decade.

“At that point it will save us quite a bit of money,” Moore said.

According to Rick Elwell, chief financial officer of the Elliot Hospital in Manchester, the poor, the middle class and the rich would pay different premiums, co-payments and deductibles under the new law. And they will have to find their own best drug plan.

“If you think the confusion is bad now, it will reign in another 60 to 90 days,” he said. “If you’re 85, you’re reading 20 pages of legalese, and you have these competing plans to choose from. They’re setting you up for a big fall. Our physicians are universal in telling us the elderly are uncertain how it will work.”

Barbara Case, head of the pharmacy at Catholic Medical Center, said some people could lose if they take Medicare Part B, a voluntary program.

“People who use around $2,000 a year in drugs or $10,000 will make out best,” she explained. “Between $2,000 and $5,000 it will help a little, but you have the premiums and 25 percent patient share to consider.”

Dr. Tom Johnson of New England Allergy in Derry says the fiscal success of Part D depends on strong enrollment from seniors who use few meds.

“I’m not sure that’s a good premise to build a program on,” he said. “And how will people in their 70s and 80s make rational decisions on their plan? It’s a massive confusion. We need some simple graphs comparing all the private plans so people know what they’re buying. I haven’t seen any, and it’s getting late.”