States to Be Reimbursed for Emergency Drugs

California and more than 20 other states will be “fully reimbursed” for hundreds of thousands of emergency prescriptions for seniors who ran into trouble with the new Medicare drug benefit, top federal officials said Tuesday.

The promise was part of a seven-point plan by Health and Human Services Secretary Mike Leavitt to try to resolve the continuing frustration faced by many patients and pharmacists since the benefit took effect three weeks ago.

Leavitt’s announcement marked the first time that a senior official publicly acknowledged the need to fix the broad range of problems. It came a week before President Bush’s scheduled State of the Union message, in which the president, despite the glitches, is expected to praise the benefit as a significant accomplishment and a foundation for market-oriented healthcare reforms.

Started Jan. 1, the program offers 43 million Medicare beneficiaries the opportunity to enroll in private insurance plans providing government-subsidized coverage for their outpatient prescriptions. But its complicated design appears to have dampened enthusiasm among seniors, and many low-income beneficiaries who were automatically enrolled in the program have encountered a host of unintended coverage problems, leading some to leave the pharmacy without medicines they needed.

Quoting an e-mail sent to him by an Alabama pharmacist, Leavitt said, “ ‘There are still plenty of bumps, but it’s much better.’

“To every single [patient] who went to the drug counter and wasn’t able to get a prescription filled, it was a big problem -- and we are taking it seriously,” he said.

Federal and state officials estimate that 80% to 90% of seniors have not encountered such problems. But error rates of 10% to 20% in a program that is supposed to provide crucial medications for millions of people are considered unacceptable.

Leavitt also threatened to unleash federal investigators on private drug plans that failed to deliver services required by their contracts with the government, such as providing transitional supplies of medications they did not normally cover.

Critics said Leavitt’s response was overdue.

“The secretary is confronting reality finally, and that is a good thing,” said Robert M. Hayes, president of the Medicare Rights Center, a New York-based advocacy group. “We all know consumers were confused, but we had no sense the leadership in the federal government was so confused.”

California has spent more than $9 million for about 110,000 emergency prescriptions since Gov. Arnold Schwarzenegger intervened about two weeks ago.

The state was concerned that many low-income and disabled beneficiaries who had gotten drugs under Medi-Cal were having problems renewing prescriptions under Medicare. In some cases, beneficiaries were dropped from computerized eligibility lists. In others, the drug plans wanted hefty co-payments that low-income patients were not supposed to be charged. Some plans did not cover the same drugs that Medi-Cal did.

As part of the reimbursement plan, the federal government will help states collect from drug plans that were supposed to be taking care of low-income beneficiaries. Washington will also cover the states’ administrative costs plus any difference between what pharmacies charged the states and rates the drug plans pay to pharmacies.

“Almost all of it is paid for by the plans,” Leavitt said.

Medicare Administrator Mark B. McClellan said no congressional action was needed to authorize the program. He said he expected most states to shut down their emergency assistance efforts by Feb. 15.

“We will ensure the plans reimburse the states ... and pay for any difference,” he said. Federal officials did not yet have a cost estimate.

Such an arrangement would be acceptable to California, Stan Rosenstein, the state’s deputy director of medical services, said in a recent interview.

“We are willing to work with the federal government on that,” he said. “It can work as long as the federal government insists that the plans reimburse us.”

Leavitt’s repair plan for the Medicare drug benefit closely tracks the flaws that critics have pointed to in recent weeks. It calls on Medicare to purge computerized errors that have caused delays and on drug companies to beef up call centers.

It also urges seniors who want to enroll in or switch plans to do so early in the month so their paperwork is in order on the first day of the following month, when coverage takes effect. But that might be difficult, said advocates for the elderly, because some changes are prompted by unforeseen medical needs.