Bush Administration Settles Nationwide Class Action in Medicare Prescription Drug Case

Friday, June 20, 2008 General News
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SAN FRANCISCO, June 19 Pursuant to a settlement agreementfiled in federal court today in the Medicare Part D class action lawsuit Situv. Leavitt, the Bush administration has agreed to make significant changes toits administration of the prescription drug benefit for low-incomebeneficiaries. If approved by the judge, the agreement will make it easierfor seniors and individuals with disabilities to access the full benefits ofthe Medicare Part D program and the Low Income Subsidy.

The case was filed against Michael Leavitt, Secretary of the Department ofHealth and Human Services, by the National Senior Citizens Law Center and theCenter for Medicare Advocacy in April 2006 and was certified as a nationwideclass action in January 2007. Pro bono counsel from the law firm of WilsonSonsini Goodrich & Rosati later joined the plaintiff team. Plaintiffs arguedthat the Bush Administration failed to provide sufficient protections for low-income senior citizens and persons with disabilities in developing theMedicare Part D enrollment and low income subsidy deeming system.

The case was brought on behalf of 6.2 million low-income "dual eligible"Medicare beneficiaries, who also receive Medicaid. Dually eligiblebeneficiaries are elderly and/or disabled and very poor. The settlementaddresses chronic problems related to information management in the MedicarePart D program. Plaintiffs argued that poor management created ongoingbarriers for low-income people struggling to obtain prescription medications.Dual eligibles rely on an average of ten more prescriptions per month thanother Medicare beneficiaries. These beneficiaries receive a Low-Income Subsidy(LIS), which entitles them to purchase prescription medication for a nominalcharge, and are automatically enrolled into a Part D plan.

"This settlement agreement is a victory for many of our nation's mostvulnerable citizens," said National Senior Citizens Law Center Staff AttorneyKevin Prindiville. "These individuals have faced life-threatening delays inreceiving vital medication. They do not have the means to front the costs oftheir prescription drugs while Medicare and the plans sort out paperwork. Weview the administration's agreement to this settlement as a sign that it isnow committed to providing adequate protections for these beneficiaries."

The information management system that notifies pharmacies of theenrollment and low-income status of dual eligibles has been dogged byextensive delays when enrollees join the system or change drug plans. Inaddition to voluntary plan changes, a large proportion of beneficiaries havebeen forced to change plans each year due to ongoing shifts in availablecoverage. The system is dauntingly complex for beneficiaries and pervasiveflaws have left many in this vulnerable population with gaps in coverage ofessential medication while technical issues are resolved among the Centers forMedicare and Medicaid Services (CMS, the federal agency responsible foradministering the Medicare program), state governments, pharmacies and drugplans.

In exchange for the plaintiff's dismissal of their claims against theSecretary, CMS agreed to make a number of changes that will streamline theMedicare Part D enrollment process. The agency will:

-- Speed up the enrollment process for new dual eligibles. Instead ofwaiting several weeks to process files received from states identifying newdual eligibles, CMS will process these files within one business day ofreceipt. CMS will also allow states to submit these files more frequently.

-- Require plans and CMS Regional Offices to provide additional assistanceto beneficiaries whose names are inadvertently missing from pharmacy or plancomputer systems. New protocols will shift the burden of proof away frombeneficiaries and to providers when eligibility is in question.

-- Educate pharmacy organizations about new poli

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