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How CMS’ Attack on the Part D Program Will Increase Costs and Reduce Choices for Seniors

Hearing Description: The House Energy and Commerce Health Subcommittee recently held a hearing – “Messing with Success: How CMS’ Attack on the Part D Program Will Increase Costs and Reduce Choices for Seniors” – to examine the proposed rule changes to Medicare Part D by the Centers for Medicare and Medicaid. The Deputy Administrator for CMS argued the rule change would increase oversight and address vulnerabilities to the program. The second panel of witnesses argued the rule change would do way more harm than good.

Hearing Date: February 26, 2014

Hearing Summary: Prepared for AAPS by the Market Institute

The Health subcommittee recently met to examine how Centers for Medicare and Medicaid is affecting the Medicare Part D plan. Chairman Joe Pitts (R-PA) said in his opening statement that last year 39 million people were enrolled in Medicare Part D. More than 90% of seniors are satisfied with their coverage. Part D should be the model for future reform for Medicare reform. CMS has taken it upon itself that it can interfere in plans and pharmacies . He maintains that CMS is choosing to ignore the law. Limiting seniors’ choices will inevitably lead to higher costs. Premiums could go up 10-20%. Ranking member Frank Pallone (D-NJ) said in his opening statement that the committee should thoughtfully assess what exactly is going on in the Part D program and how to better strengthen it.

Rep. Michael Burgess (R-TX) said in his opening statement that CMS has proposed a fundamental restructuring of the Part D program. Premiums will go up for 14 million seniors and costs will rise for everyone enrolled in Medicare. Rep. Henry Waxman (D-CA) said in his opening statement that there are still things to be done to improve Part D and reduce taxpayer costs.

The first witness, Jonathan Blum, Principal Deputy Administrator at Centers for Medicare and Medicaid testified in his opening statement that they believe the Medicare Part D has never been stronger. The ACA has closed the “donut gap” in Part D coverage. The proposed rule change is designed to address vulnerabilities in the program and improve benefits for beneficiaries.

In response to questioning, Jonathan Blum said:

  • CBO projects that Part D spending will increase far more than other Medicare parts in the next 10 years
  • He believes there is tremendous confusion in the marketplace
  • There are many more generic drugs on the market then the CBO had predicted there would be when it made projections 10 years ago
  • They do not believe the status quo for the program is good; the spending for Part D is projected to keep rising
  • CMS has received over 30,000 complaints about Part D

The first witness on the second panel, Douglas Holtz-Eakin, President of the American Action Forum testified in his opening statement that the proposed rule by CMS rests on a questionable legal foundation. Analysts believe the rule is likely to raise costs for seniors, programs, and federal taxpayers. CMS should not be able to radically rework a successful program that impacts so many individuals on a whim.

The second witness on the second panel, Carl Schmid, Deputy Executive Director at The AIDS Institute testified in his opening statement that as part of the ACA Congress even further codified the “six protected classes.” They see no reason why the protected classes should be changed, and if they were, we would like to see more classes of drugs gain “protected” status rather than reducing them so that more patients can gain access to the medications that are prescribed by their providers. Medicare Part D is enabling the elderly and the disabled to access the medications their providers prescribe and at the same time saving and prolonging countless lives.

The third witness on the second panel, Joe Baker, President at the Medicare Rights Center testified in his opening statement that there are both policies in the proposed rule they support and ones they do not support. They support ensuring meaningful differences between Part D plans, increasing drug pricing transparency, and enhancing oversight. They are opposed to the scaling back of drug classes, the current model of drug cost savings, and expanding Medicare Advantage reward programs.

In response to questioning, Douglas Holtz-Eakin said:

  • The proposed rule interference is going to affect drug pricing and competitiveness

Hearing Website:

Links to Testimony:

Jonathan Blum
Principal Deputy Administrator
Centers for Medicare and Medicaid Services.

Click to access HHRG-113-IF14-Wstate-BlumJ-20140226.pdf

Douglas Holtz-Eakin
American Action Forum

Click to access HHRG-113-IF14-Wstate-Holtz-EakinD-20140226.pdf

Carl Schmid
Deputy Executive
Director The AIDS Institute

Click to access HHRG-113-IF14-Wstate-SchmidC-20140226.pdf

Joe Baker
Medicare Rights Center

Click to access HHRG-113-IF14-Wstate-BakerJ-20140226.pdf

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