Update: Gov. Jim Douglas said in a letter to HHS Secretary Kathleen Sibelius that the state will not seek to recover $250 rebate checks from seniors after all. The Associated Press confirmed the statement with Douglas aide Heidi Tringe this evening. Douglas was under pressure from the Obama administration and Vermont’s congressional delegation to drop the rebate recoupment plan. Read Gov. Douglas’ 6/14/2010 letter to Sec. Sebelius.
The Douglas administration is in a tug of war with Vermont’s own Sens. Patrick Leahy and Bernie Sanders over a federal $250 prescription drug rebate for seniors. On Friday, Kathleen Sibelius, director of the federal Health and Human Services Department, weighed in – pulling for Leahy and Sanders.
The rebate is a one-time benefit for seniors who, under the Part D Medicare prescription program, fall into the so-called “donut hole.” The federal government pays up to $2,250 in drug benefits for seniors. After that, they bear the full expense until they reach a $5,100 threshold, at which point Medicare covers the cost.
Over the next 10 years, Congress will slowly reduce the coverage gap until it is eliminated in 2020. The rebate is the first step toward phasing out the donut hole, and the provision is part of the Affordable Health Act, the health care reform bill recently passed by Congress. Both Leahy and Sanders supported the legislation.
Under the new law, the Centers for Medicare and Medicaid began sending out the first rebates last week. In all, 9,000 Vermont seniors will receive the one-time, $250 reimbursement checks.
The Douglas Administration, however, wants 2,800 of those seniors to turn the rebate money over to the Office of Vermont Health Access.
Susan Besio, director of the office, said the state should get the money because it provided benefits to those seniors who hit the “donut hole” in the Medicare Part D prescription drug program.
“All we’re doing is asking is that people pay us up to $250 for the amount we’ve covered for them this coming year that they didn’t have to pay out of pocket,” Besio said.
The congressional delegation wants seniors to receive the rebates regardless of whether they were covered under the state’s VPharm prescription assistance program. They issued a joint press release on Friday.
“At a time when Vermont seniors are hurting, the state should reconsider its plans to ask many low-income seniors to return this much-needed help,” they wrote. “The state’s rebate recall also would add confusion and new layers of complexity for seniors and for the state. Vermont seniors who are struggling enough already to pay for the medicine they need can use all the help they can get.”
Sibelius sent a letter to Gov. Jim Douglas, urging him to forego an attempt to recover the money from individuals.
“The rebate checks are intended to provide fiscal relief to seniors, not states,” Sebelius wrote. “Seniors who enter the ‘donut hole’ have serious illnesses, take more medication and need additional financial help. They have extremely high out-of-pocket costs; for example, they must personally spend at least $2,830 to qualify for rebate checks in 2010.”
Vermont is the only state in the country that covers “all or the majority of the cost-sharing for people who have pharmacy costs who are enrolled in Part D,” Besio said.
For seniors in the donut hole, the VPharm supplemental prescription assistance program pays for maintenance drugs for ongoing conditions like diabetes. Besio says those Vermonters “may not have incurred $250 in out-of- pocket costs” — because the state covers most of their expenses.
Advocates argue that under the VPharm program, seniors still rack up significant costs.
Besio plans to send out a letter this week to 2,800 seniors, asking them to forward the rebate money on to the state, or else face a $250 liability when they attempt to procure prescription drugs through the program.
Benefits counselors on staff would target seniors who hit the donut hole.
The state would have until Dec. 31, 2010 to recoup the money; some of the checks, which are being issued in batches over the coming months, will be sent out after that date.
The state stands to gain $600,000 if all affected seniors comply with the request from her office.
“All we’re doing is asking that people pay us up to $250 for the amount we’ve covered for them this coming year that they didn’t have to pay out of pocket,” Besio said.
The state, she says, needs to recover the rebate money to help defray the costs of the VPharm program.
The program costs about $5.5 million a year, and Besio said 90 percent of the money comes from the General Fund.
Seniors who qualify for the VPharm assistance program pay a monthly premium of $15, $20 or $50 a month, depending on their income. In addition, they pay a co-pay of $1-$2 for prescriptions.
Not all drugs are covered under VPharm. The program provides benefits for maintenance prescriptions and medications for acute conditions approved by Medicare.
Ken Gordon, executive director of the Northeast Kingdom Area Agency on Aging, said, “Seniors need all the help they can get to pay for prescription drugs because the VPharm program doesn’t cover everything.”
While the state is picking up costs for seniors enrolled in VPharm, Gordon said, they pay monthly premiums and co-pays that often exceed the $250 rebate.
Advocates for seniors say that the state’s attempt at recoupment will be costly and will lead to confusion for consumers. Ultimately, pharmacists will end up collecting the money for the state, they say.
“The state’s mechanism for doing this is going to be awkward at best,” Gordon said. “They’re going to have to figure out a way to calculate how much the state has spent on behalf of individuals and then essentially bill that to them, since the checks are going directly to beneficiaries.”
Besio agreed recoupment will be staff intensive. The informational letter that goes out this week will explain to seniors what’s happening and ask them to call a 1-800 number. Every 45 days, Besio said, the office will run an analysis to determine who the state is covering and then send another set of letters out.
“We’re just trying to help people understand it,” Besio said. “We’re not trying to harm people; we’re trying to keep this program in place and keep it financially viable.”
When the state has attempted to recoup money from consumers in past, Gordon said, it has not gone well.
“It essentially asks the pharmacist to be the collector of the money, and it causes confusion at the pharmacy counter where there’s already enough confusion,” Gordon said.
The AARP, an advocacy group for seniors, said in a likely scenario, consumers will go to the pharmacist and find out their benefits have been suspended for an indefinite period, until they pay for $250 worth of medication. This will not only sow confusion, the advocacy group said, but may ultimately lead some seniors to forego essential medications.
In a letter to lawmakers last fall, AARP and the Community of Vermont Elders wrote, “This short-term disruption of prescription assistance may well have long-term human and fiscal consequences if beneficiaries are unable to obtain necessary medications.”
