States Scrambling to Prep for Medicare Changes

By: - June 1, 2004 12:00 am

Senior citizens across the country may be scratching their heads trying to figure out how the new federal Medicare prescription drug discount cards, which go into effect today (June 1), will affect the pharmacy benefits they already receive from their state.

The short answer? There isn’t one.

Because state pharmacy programs are so varied and the new federal law so complex, there hasn’t been a cookie-cutter response from the roughly 20 or so states that already help senior citizens pay for medicine. However, states have been scrambling over the past five months to make a number of changes through a flurry of legislation.

Changes range from small administrative tweaks to sweeping program overhauls. South Dakota, for example, eliminated its own drug discount program to let the federal government pick up the slack. Several other states are poised to save millions because they’re speedily signing up poor seniors for federal Medicare cards so that the first $600 of drug costs normally covered by the state now will be paid for by the U.S. government.

The temporary Medicare cards could save seniors up to 18 percent on a range of brand name drugs and up to 60 percent on generics, federal health officials say. The cards are available to any resident over 65 years old who does not qualify for Medicaid, the state-federal health insurance program for the poor and disabled.

Medicare, which was created in 1965, will begin offering more comprehensive drug coverage to the elderly in 2006. More than 50 bills and resolutions have been filed in 24 states in 2004 relating to the Medicare law, which President Bush signed in December 2003. Nine proposals have been signed into state law.

“It’s a tight time frame in terms of states’ ability to mesh what they are already doing with the federal law,” said Richard Cauchi, a health policy analyst at the National Conference of State Legislatures.

The most recent twist in states’ Medicare preparedness comes on the heels of a decision by the federal government that likely will free up additional dollars in at least seven states that plan to take advantage of it: Connecticut, Maine, Michigan, Massachusetts, New Jersey, New York and Pennsylvania.

The Bush administration’s mid-April decision could save these states millions of dollars and could make it simpler for seniors to get the discount. The administration agreed to let those states, whose laws allow them to act on behalf of a beneficiary, to automatically enroll low-income seniors now receiving state prescription drug assistance in the new Medicare discount-card program. Those poor seniors then will be eligible for a federal subsidy of $600 in 2004 and another $600 in 2005, relieving the state of paying out that amount for those residents with neutral effect on the seniors.

“States have been really focused on this and have acted quickly to make sure they can re-adjust,” Cauchi said, adding that the $600 federal credits may be a big financial plus for states with large state-funded drug assistance programs.

Pennsylvania, for example, expects to save $150 million over the next 18 months by shifting the first $600 in drug costs to the federal tab for nearly 140,000 low-income seniors. “This is like Nirvana,” said Tom Snedden, director of the state’s 20-year-old pharmacy program called PACE (Pharmaceutical Assistance Contract with the Elderly), which is funded by lottery revenue. The automatic enrollment will cost the state about $4 million to administer, “but given the savings we’re getting back, I’d say it’s a good deal,” Snedden said.

“Older people generally are looking at this Medicare benefit with a great deal of anxiety, and what we’re trying to do is stamp that anxiety down by making it clear that (our programs) aren’t going away,” Snedden told “But we will be trying to exploit this opportunity to get some savings in order to make our program financially viable.”

To take advantage of automatic enrollment, New York lawmakers May 3 passed an emergency budget bill in 24 hours giving the state permission to sign up poor patients currently in the state prescription drug program, EPIC Rx. One week later, Massachusetts legislators approved a similar law in just two days.

“These states that have big pharmacy programs that are able to do this auto-enrollment are pleased to be able to save some money,” said Trish Nemore, an attorney with the Center for Medicare Advocacy, a Washington, D.C.-based organization that did not support the new changes to Medicare but is working to help patients benefit from them.

Roughly half of the 50 states don’t offer drug discounts or subsidies to seniors beyond Medicaid, so in these states the Medicare discount cards won’t result in direct savings for the state but will provide some relief for elderly and disabled patients.

“It’s in (these) states’ best interest to get the word out about the benefit,” said Trudi Matthews, associate director of health policy at the Council of State Governments. “There have been a number of states that have tried to set up assistance programs, but just couldn’t swing it because their budgets were just in the tank.”

South Dakota Gov. Mike Rounds (R), who approved the state’s discount plan in 2003 to offer temporary relief to senior citizens grappling with rising prescription costs, signed legislation March 9 to end the program that benefited 37,077 seniors. “The original bill said the (state program) would be put in place until a federal prescription drug program was implemented,” said Mark Johnston, the governor’s press secretary. The state has set up toll-free hotlines and redirected staff for the next three months to help seniors sign up for the new cards.

Nemore of the Center for Medicare Advocacy said more states may drop their homegrown programs now that the federal government has started to help shoulder the cost of drugs for older Americans. “The state pharmacy programs have been viewed as somewhat of a stop-gap measure for the Medicare population that was unable to get drug coverage,” she said.

Meanwhile, several other states have taken action:

  • Maine passed a law in late January requiring elderly patients to use the Medicare discount card before using a state-sponsored card.Indiana established a special Medicare task force to coordinate the state’s subsidy program with the federal Medicare law and make sure Indiana isn’t duplicating benefits. Like South Dakota,
  • Indiana’s one-year-old drug program also included a provision requiring the state to review its program if and when the federal government offered a benefit.
  • Conversely, Alaska Gov. Frank Murkowski (R) signed a bill March 5 creating a -per-month cash assistance option or a ,600-per-year prescription drug plan that would end when the full Medicare benefit takes effect in 2006.
  • Ohio officials worked with a private-sector company to get the state’s Golden Buckeye senior discount card approved as an official Medicare card. 
  • In Iowa, both chambers of the Legislature passed a bill to establish an information clearinghouse on pharmaceutical discounts for patients. However, Gov. Tom Vilsack (D) vetoed the measure because he saw it as a doubling-up of federal efforts and didn’t want to spend state tax dollars to provide the same information, according to a statement he penned May 14.

State governments also are stepping up efforts to help seniors choose from the more than 70 federally approved discount cards and to inform them about the new law. For example, Republican Govs. George Pataki of New York, Bob Taft of Ohio and Jeb Bush of Florida and Democratic Gov. John Baldacci of Maine all announced plans to help educate seniors in their states.

In addition, the state attorneys general in Texas and Massachusetts have launched efforts to investigate fraud and scams associated with the discount cards. 

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