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F I S C A L I M P A C T R E P O R T

SPONSOR Feldman

ORIGINAL DATE

LAST UPDATED

02/14/06

HB

SHORT TITLE

SUPPORT FEDERAL MEDICARE CHANGES

SM 8

ANALYST Weber

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Human Services Department (HSD)

Department of Health (DOH)

SUMMARY

Synopsis Senate Memorial 8

Senate Memorial 8 makes the following observations.

•

the Medicare, part D program is proving to be one of the most complicated programs ever

created with significant and serious implementation problems; and

•

the benefits promised to senior citizens are not being realized because the program is so

difficult to understand; and

•

a dire need exists to revise the program so that the program can provide the promised

benefits.

The memorial requests that due to the preceding conditions that the members of the New Mexico

congressional delegation be requested to support the following changes to the Medicare, Part D

program.

•

elimination of the penalty for all

Medicare

-eligible individuals who do not enroll by May

15, 2006;

Senate Memorial 8 – Page 2

•

inclusion of a requirement that the prescription drug plans drop coverage of drugs on

their formularies only after one year advance notice to coincide with the annual open

enrollment period, except that drugs that have been determined to be dangerous or

removed from the market may be dropped as necessary;

•

standardization of the formulary design so that each plan has the same number of tiers

and requirements for coverage;

•

modification of the requirements about what can be counted toward a

Medicare

beneficiary's true out-of-pocket cost to include all prescription drugs purchased on behalf

of the beneficiary regardless of where the drugs have been purchased; whether the drugs

have been purchased through a state pharmacy program or with a discount drug card; or

whether the drug is on the formulary of the beneficiary's plan;

•

assurance of transparency so that states know the cost negotiated by the prescription drug

plan to ensure that all negotiated rebates are passed through to the beneficiaries; and

•

institution of price negotiation for the purchase of prescription drugs for the

Medicare

program, similar to the provisions already in place under

Medicaid

and t

he veterans'

administration;

It is further requested that copies of this memorial be transmitted to each member of the New

Mexico congressional delegation.

SIGNIFICANT ISSUES

Human Services offers the following comments.

Significant problems regarding access to drugs and the cost of drugs for the new

Medicare Part D beneficiaries have been reported nationally. All the provisions in this

memorial would lessen the problems and financial burden of low income Medicare Part

D recipients. There would likely be increased costs to the federal government if these

changes were to be made.

Formulary changes without adequate notice are a significant problem for all recipients.

Because of the significant implementation issues, eliminating the late penalty for late

enrollment would allow additional time for the Centers for Medicare and Medicaid

Services to iron out these issues.

A change in the definition of True Out Of Pocket (TrOOP)/Incurred Costs would more

accurately count recipient expenses that are tied to increased program benefits.

Federal legislation is being introduced to help rectify problems associated with the new

Medicare Part D benefit. This memorial would give non-binding direction to the New

Mexico congressional delegation on how to react to this legislation.

MW/nt