Legislation to call for federal drug cost reimbursement to states

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Five senators are planning to introduce legislation that would pay back states for covering the cost of drugs for some beneficiaries during the rocky start of the new Medicare Part D drug program.

The bill would fully reimburse states for costs, plus interest. It would also require Michael Leavitt, secretary of the Department of Health and Human Services, to recover overpayments to Medicare drug plans and return the money to Medicare.

Senators sponsoring the bill are: Norm Coleman (R-MN), Dianne Feinstein (D-CA), Frank Lautenberg (D-NJ), Charles Schumer (D-NY) and Olympia Snowe (R-ME).

Earlier this week, Dr. Mark McClellan, administrator of the Centers for Medicare & Medicaid Services said that CMS does not have the authority to pay states back directly. At least 26 states have stepped in to cover prescription drugs for dual eligible beneficiaries who have not been able to receive drugs under the new benefit.

Meanwhile, the Pharmaceutical Care Management Association, a trade group representing pharmacy benefit managers, encouraged policymakers not to judge the benefit based on the first two weeks. One source of the initial problems is the government, which provided incomplete information to pharmacy benefit managers on enrollees, particularly dual eligibles, said President Mark Merritt. Another problem involved retailers who were inexperienced in high-tech information management, he said. Also, small independent pharmacies could not adequately increase staffing levels to deal with start-up issues.