[Federal Register Volume 67, Number 44 (Wednesday, March 6, 2002)]
[Proposed Rules]
[Pages 10293-10296]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-5130]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 403
[CMS-4032-ANPRM]
RIN 0938-AL30
Medicare Program; Medicare-Endorsed Prescription Drug Discount
Card Assistance Initiative for State Sponsors
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Advance notice of proposed rulemaking.
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SUMMARY: This advance notice of proposed rulemaking cross-references
the proposed rule entitled ``Medicare Program; Medicare-Endorsed
Prescription Drug Card Assistance Initiative'', published elsewhere in
this Federal Register issue. This advance notice of proposed rulemaking
describes how States could partner with private discount card sponsors
under that proposed rule, and outlines additional steps that the
Department of Health and Human Services (HHS) is considering to propose
in support of current State efforts to make more readily available
affordable prescription drugs to Medicare beneficiaries, including
efforts to help low income Medicare beneficiaries access lower prices
for prescription drugs.
DATES: We will consider comments if we receive them at the appropriate
address, as provided below, no later than 5 p.m. on May 6, 2002.
ADDRESSES: In commenting, please refer to file code CMS-4032-ANPRM.
Because of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission. Mail written comments (one original and
three copies) to the following address ONLY: Centers for Medicare &
Medicaid Services, Department of Health and Human Services, Attention:
CMS-4032-ANPRM, P.O. Box 8013, Baltimore, MD 21244-8013.
Please allow sufficient time for mailed comments to be timely
received in the event of delivery delays.
If you prefer, you may deliver (by hand or courier) your written
comments (one original and three copies) to one of the following
addresses: Department of Health and Human Services, Hubert H. Humphrey
Building, 200 Independence Avenue, Room 443-G, Washington DC 20201, or
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Room
C5-16-03, Baltimore, MD 21244-1850.
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and could be considered late.
For information on viewing public comments, see the beginning of
the Supplementary Information section.
FOR FURTHER INFORMATION CONTACT: Debbie Van Hoven, (410) 786-8070.
SUPPLEMENTARY INFORMATION: Inspection of Public Comments: Comments
received timely will be available for public inspection as they are
received, generally beginning approximately 3 weeks after publication
of a document, at the headquarters of the Centers for Medicare &
Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244,
Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule
an appointment to view public comments, telephone (410) 768-7197.
I. Background
In a related proposed rule entitled, ``Medicare Program; Medicare-
Endorsed Prescription Drug Card Assistance Initiative'', published
elsewhere in this Federal Register issue, we propose providing
assistance and education to all Medicare beneficiaries, and especially
those without prescription drug coverage, to lower their out-of-pocket
prescription drug costs. We would provide a Medicare endorsement to
reputable and high quality private sector prescription drug discount
card programs, based on requirements designed to make the best use of
the strengths of the private sector. We would also educate
beneficiaries about the private sector tools these programs would use,
so that beneficiaries who could benefit from a prescription drug
discount card would be able to compare and understand which Medicare-
endorsed card would best meet their needs. While it would be possible
for States to cooperate and partner with
[[Page 10294]]
these private sector programs under that proposed rule, a State would
not be allowed to apply directly to us to have its own privately
administered prescription discount card program endorsed by Medicare.
This advance notice of proposed rulemaking outlines additional steps
that the Department of Health and Human Services (HHS) is considering
to propose in support of current State efforts to make more readily
available affordable prescription drugs to Medicare beneficiaries,
including efforts to help low income Medicare beneficiaries access
lower prices for prescription drugs.
With limited exceptions, the Medicare benefit package currently
does not include an outpatient prescription drug benefit. While
approximately 73 percent of Medicare beneficiaries have drug coverage
at any given time (under, for example, employer-sponsored retiree
health plans or Medicaid), an estimated 10 million have no drug
coverage. Without access to the discounts and rebates that come with
most kinds of prescription drug coverage, many beneficiaries either pay
list prices for drugs or have access only to drug discount programs
that include modest discounts at the pharmacy. These beneficiaries
often do not have access to many of the valuable services offered by
some drug benefit and drug assistance programs, including services such
as drug interaction and allergy monitoring. Further, a substantial
share of beneficiaries have little experience with choosing among
prescription drug plans, as envisioned in almost all Medicare drug
benefit proposals being considered by the Congress. This, along with
our need to operationalize such a complex benefit, implies a
substantial ``lead time'' for successful implementation of a
prescription drug benefit. In his fiscal year 2002 and 2003 budgets,
the President proposed adding a prescription drug benefit for all
Medicare beneficiaries. In the interim, before the Medicare drug
benefit can be enacted and fully implemented, the President believes
that beneficiaries should have access to rebates or discounts from
pharmaceutical manufacturers on prescription drugs, as well as to the
pharmaceutical management services that are commonly available in good
private insurance plans.
The objectives of the private sector oriented Medicare-Endorsed
Prescription Drug Discount Card Assistance Initiative described in the
proposed rule published elsewhere in this Federal Register issue would
be to:
Educate Medicare beneficiaries about private market
methods available for securing substantial discounts from manufacturers
and other competitive sources on the purchase of prescription drugs.
Provide a mechanism for Medicare beneficiaries to gain
access to the effective tools widely used by pharmacy benefit managers
and pharmacies to get higher quality pharmaceutical care, for example,
monitoring for drug interactions and allergies.
Publicize information (including drug-specific prices,
formularies, and networks) to facilitate easy consumer comparisons that
would allow Medicare beneficiaries to choose the best card for them.
Enhance and stabilize participation of Medicare
beneficiaries in effective prescription drug assistance programs,
increasing the leverage and ability of these programs to negotiate
manufacturer rebates or discounts for Medicare beneficiaries and to
provide other valuable pharmacy services.
Enhance the quality and use of Medicare-covered services
by improving access to prescription drugs.
Endorse qualified private sector prescription drug card
programs (either for profit or non-profit), based on structure and
experience; customer service; pharmacy network adequacy; ability to
offer manufacturer rebates or discounts (passing through a substantial
portion to beneficiaries, either directly or indirectly through
pharmacies), and available pharmacy discounts; and permit endorsed
entities to market their programs as Medicare-endorsed.
Provide Medicare beneficiaries a low (in Year One, $25
maximum) or no-cost opportunity to enroll in a Medicare-endorsed
prescription drug discount card program.
To receive a Medicare endorsement, private prescription drug
discount card program sponsors would be required to apply for
endorsement, demonstrate that they meet all of the requirements
concerning: (1) applicant structure, experience and participation in
the administrative consortium; (2) customer service; and (3) rebates,
discounts and access; and enter into a formal agreement with us.
The proposed requirements for Medicare endorsement are tailored to
reflect the strengths of the private market place to provide Medicare
beneficiaries with high quality services, as well as to protect the
integrity of the initiative, beneficiaries, and the Medicare name from
firms with questionable business practices.
While we believe that all of these requirements are important to
assuring best practice in the private sector, we do not believe they
are all well suited for States that are already sponsoring privately
administered discount card programs. For example, the definition of a
regional sponsor includes providing service in at least two contiguous
states. Clearly a single State would not meet this criterion.
Private sector drug discount program sponsors also would have to
agree to abide by the guidelines of, jointly administer, and fund a
privately run administrative consortium, intended, among other roles,
to review and approve sponsors' marketing materials. It is not clear
that a State would be able to participate in and fund such an
administrative consortium as a full member, as contemplated in the
proposed rule.
Additionally, some customer service standards and the specific
beneficiary confidentiality requirements for private sector sponsors
may not be appropriate for States, as their infrastructure to support
the public is designed to serve a myriad of needs, and these
requirements are intended to protect Medicare beneficiaries, a goal
already shared and being acted upon by States.
Also, some State programs may currently enroll other populations,
as well as Medicare beneficiaries. A State may need flexibility to
design its program to be more inclusive in order to be consistent with
its public mission. In particular, some State programs may be targeted
to people with low incomes, including Medicare beneficiaries.
Similarly, States may also want flexibility concerning the requirements
to accept all Medicare beneficiaries and to limit enrollment to only
Medicare beneficiaries. For example, some States may have prescription
drug discount programs for some segments of the Medicare population,
such as only those 65 years old and older, or for larger segments of
the senior population beyond those eligible for Medicare, such as those
age 60 and older.
Under the private sector initiative described in the proposed rule
published elsewhere in this Federal Register issue, States would be
able to partner with private discount card program sponsors by
selecting a Medicare-endorsed program and offering its own endorsement,
and having a distinct card that reflects the State endorsement. States
would not be given a Medicare endorsement for a discount card program.
Rather, States could provide their own endorsement of a private sector
discount card program that was also endorsed by Medicare, with the
following restrictions.
One restriction would be that the private sector program would be
required to continue to operate for the
[[Page 10295]]
State as it is defined in the private drug discount card program
sponsor's agreement with us. Specifically, we would allow drug
formularies and prices to vary geographically, but they could not vary
among different populations in the same area. Also, the endorsed
discount card program would only enroll Medicare beneficiaries.
Further, the card program would have to be available to all Medicare
beneficiaries in a State, and we would not allow it to be restricted to
only certain Medicare beneficiaries, such as those age 65 and over, or
those with certain levels of income. However, different populations
could be segmented for marketing purposes provided the marketing
materials would not mislead or intentionally misrepresent to the public
the nature of the endorsed program, and marketing activities would
include marketing to beneficiaries with disabilities, beneficiaries
with End-Stage Renal Disease (ESRD), and beneficiaries age 65 and over.
II. Purpose of Advance Notice of Proposed Rulemaking
We are aware that a number of States are implementing privately
administered programs that would lower the out-of-pocket prescription
drug costs of low income Medicare beneficiaries. Some of these State
programs parallel the proposed Medicare private sector initiative
published elsewhere in this Federal Register issue in three important
aspects--using voluntary market participation, obtaining manufacturer
rebates or discounts, and administering the programs through private
enterprise. State programs contain different design elements to secure
discounts on prescription drugs for Medicare beneficiaries.
We are particularly interested in exploring cooperative approaches
we could pursue with the States to support the types of State
initiatives that, like the proposed Medicare private sector initiative,
rely on market forces and on the private sector for administration.
These are structures that underlay Medicare drug benefit proposals
being seriously considered by the Congress. Concerning market forces,
we are specifically considering support for State programs in which the
rebates and discounts are driven by competition for market share rather
than by mandated levels. The experience gained under these State
initiatives would inform policy makers as Medicare drug benefit
proposals are being debated, and would assist beneficiaries,
government, and the market place in preparing for a Medicare drug
benefit.
We invite comments on a possible Medicare endorsement of States
efforts to lower beneficiaries' out-of-pocket costs for prescription
drugs, using market-based strategies. For example, one consideration
regarding State programs is whether the requirement under the private
initiative to obtain rebates or discounts from drug manufacturers and
share them with beneficiaries should apply to State efforts as well. We
are aware that some State drug discount programs, at least initially,
have not included manufacturer rebates or discounts that are passed on
to consumers.
Concerning State partnerships under the proposed private sector
initiative published elsewhere in this Federal Register issue, we
invite comments to better understand State-specific circumstances under
which we would consider a private sponsor's agreement with us to vary
from the required terms and conditions. Specifically, we would like to
understand whether we should allow enrollment beyond Medicare
beneficiaries, for example to include people with low incomes, or allow
targeting of deeper discounts to low income Medicare beneficiaries, in
order to help align the terms of our endorsement with the State's
objectives to assist consumers in lowering their out-of-pocket spending
on prescription drugs and accessing high quality prescription drug
services.
III. Objectives of the Advance Notice of Proposed Rulemaking
We are considering issuing a proposed rule that would provide
Medicare endorsement for State efforts built on market principles and
private sector administration to make more readily available affordable
prescription drugs to Medicare beneficiaries, including efforts to help
low income Medicare beneficiaries access lower prices for prescription
drugs, where these efforts also parallel the objectives of the proposed
Medicare Endorsed Prescription Drug Card Assistance Initiative.
We believe that the statutory authorities cited in the related
proposed rule entitled, ``Medicare Program; Medicare-Endorsed
Prescription Drug Card Assistance Initiative'', published elsewhere in
this Federal Register issue, would also support an initiative to
endorse State sponsored efforts that provide access to lower cost
prescription drugs for Medicare beneficiaries. Access to more
affordable prescription drugs would assist beneficiaries in receiving
services under Medicare and other health insurance programs, because
this access could lead them to more effectively or efficiently use
Medicare services, such as physician or hospital services. Endorsement
of State sponsored drug discount programs would also improve
beneficiary understanding of the various tools and programs available
for receiving rebates and discounts on prescription drugs and for
improving the pharmacy services they receive.
Accordingly, we are considering a proposal to provide Medicare
assistance in the form of an endorsement for, and beneficiary education
about, State programs for those States that volunteer to apply for the
Medicare endorsement and meet the following objectives:
Educate Medicare beneficiaries about market-based methods
available for securing substantial discounts from manufacturers and
other competitive sources on the purchase of prescription drugs.
Provide a mechanism for Medicare beneficiaries to gain
access to the effective tools widely used by pharmacy benefit managers
and pharmacies to get higher quality pharmaceutical care, for example,
monitoring for drug interactions and allergies.
Publicize information (including drug-specific prices,
formularies, and networks) to facilitate easy consumer comparisons that
would allow Medicare beneficiaries to choose the best card for them.
Enhance and stabilize participation of Medicare
beneficiaries in effective drug assistance programs, increasing the
leverage and ability of these programs to negotiate manufacturer
rebates or discounts for Medicare beneficiaries and to provide other
valuable pharmacy services.
Enhance the quality and use of Medicare-covered services
by improving access to prescription drugs.
Endorse qualified State sponsored prescription drug card
programs that are privately administered and for which lower
prescription drug prices are driven by competition, using criteria
concerning: structure and experience; customer service; pharmacy
network adequacy; ability to offer manufacturer rebates or discounts
(passing through a substantial portion to beneficiaries, either
directly or indirectly through pharmacies), and available pharmacy
discounts; and permit States to market their programs as Medicare-
endorsed.
Provide Medicare beneficiaries a low (in Year One, $25
maximum) or no-cost opportunity to enroll in a Medicare-endorsed
prescription drug discount card program.
[[Page 10296]]
We invite comments on the appropriateness and adequacy of these
objectives for States assisting consumers, particularly Medicare
beneficiaries, in lowering their out-of-pocket costs for prescription
drugs and improving the accessibility and quality of prescription drug
services using market based approaches.
We request comments on the appropriateness of the qualifications
requirements for selecting States for endorsement concerning: (1)
Applicant structure, experience, and relationship with the
administrative consortium; (2) customer service; and (3) rebates,
discounts, and access, as found in Section I.E of the proposed rule
cross-referenced in this advance notice of proposed rulemaking, and
published elsewhere in this Federal Register issue. We also request
comments on other terms of the proposed initiative described in that
proposed rule, as they would apply to State sponsored drug discount
card programs.
IV. Response to Comments
Because of the large number of comments we normally receive on a
proposed rule, we are not able to acknowledge or respond to them
individually. However, we will consider all comments we receive by the
date and time specified in the Dates section of this advance notice of
proposed rulemaking, and will address these comments in any proposed
regulation that results from this advance notice.
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: December 18, 2001.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
Dated: December 18, 2001.
Tommy G. Thompson,
Secretary.
[FR Doc. 02-5130 Filed 2-28-02; 4:00 pm]
BILLING CODE 4120-01-P