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REP. STARK REVISITS MEDICARE OUTPATIENT DRUG COVERAGE WITH BILL INTRODUCED ON MAY 30; Rx DRUGS WOULD BE COVERED AS STANDARD MEDICARE PART B BENEFIT

Executive Summary

Medicare coverage of outpatient prescription drugs would be provided as a standard Part B benefit beginning Jan. 1, 1993 under a bill introduced by Rep. Stark (D-Calif.) on May 30. The strategy of including drug coverage under Medicare Part B, which now primarily covers physician services, avoids one of the objections to the catastrophic care/outpatient drug coverage law that was enacted in 1988 and repealed in 1989. In that aborted program, the drug benefits were financed solely through added beneficiary premiums and income tax surcharges. One-quarter of Part B program costs are paid from beneficiary premiums while the remainder comes from general Treasury revenues. Stark estimates that the addition of the drug benefit would raise the Part B premium by $ 6 a month in the first year. Stark's latest approach, however, does not solve the financing question. Under the pay-as-you-go budget deal reached by Congress and the White House last year, Stark must find a way to offset the costs to the general Treasury. The Ways & Means/Health Subcommittee chairman acknowledged the issue in a May 30 floor statement. "The bill has been drafted without the financing necessary to cover its costs," he noted. "I fully anticipate that these benefits, if adopted by the Committee on Ways & Means, will be fully financed on the required pay-as- you-go basis." Stark's Health Subcommittee will hold a June 11 hearing on the legislation. Because it addresses Medicare Part B, the bill falls under the jurisdiction of both the Ways & Means and Energy & Commerce Committees in the House. Aside from the financing mechanism, the drug benefit's structure as proposed in HR 2500 is very similar to the repealed drug coverage law. Stark had opposed repeal of the earlier program and had joined Reps. Waxman (D-Calif.) and Gradison (R-Ohio) in an eleventh hour proposal to save drug coverage by jettisoning the broader catastrophic coverage provisions. Under HR 2500, the drug deductible would be $ 650 in 1993 and would increase by $ 50 each year. According to Stark, about one- third of the eldery will pay more than $ 650 for prescriptions this year. Patients would be required to make a 20% copayment. Coverage would include all FDA-approved drugs, insulin, pre-1962 drugs, and DESI drugs for which HHS has not yet issued a notice of opportunity for a hearing -- but would exclude home I.V drugs. Coverage of home I.V. therapy is under study by the congressional Office of Technology Assessment, with a report expected shortly. Payment levels for single-source drugs and for "multiple- source drugs with restrictive prescriptions" would be the lesser of the 90th percentile of actual charges within a geographic area or average wholesale price plus a dispensing fee. Other multiple source drugs will be reimbursed at the median AWP plus the dispensing fee. Stark's measure would set dispensing fees at $ 3 per prescription for nonparticipating pharmacies and $ 5 for participating pharmacies, the latter defined as those who participate in an electronic point-of-sale claims processing system, accept Medicare rates as full payment, and provide information to patients including advice on the "availability of therapeutically equivalent covered outpatient drugs." Stark's legislation would bar a restrictive formulary but would require a program to assure "appropriate" prescribing and dispensing practices, including establishment of prescribing standards. The program "shall identify" and "educate physicians and pharmacists" about instances and patterns of "unnecessary or inappropriate" prescribing or dispensing, "substandard care," or potential adverse reactions, the bill directs. As part of this program, HHS "shall establish for each covered outpatient drug standards for the prescribing of the drug which are based on accepted medical standards." The standards generally would reflect the reference compendia. In his floor statement, Stark asserted that the "absence of an outpatient prescription drug benefit has created a black hole in the Medicare program. Prescription drugs are as vital to the health of seniors as physician visits, lab tests, and other services readily covered under the program. This void makes no sense -- particularly at a time when seniors rely increasingly on costly and life-sustaining medications."
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